![]() ![]() It does this not only for you, but for all of your co-workers using Direct Deposit. Before each payday, the employer sends that information, along with the amount you’re owed and your pay date, to its bank. When you started work you provided your employer with your banking information. Your bank (the RDFI) then withdraws the money from your account to complete the payment of the bill, making you the “Receiver.”įor ACH credits, let’s use Direct Deposit as an example. In the case of your payment, the ACH Operator sends your payment to your bank or credit union, which is known as the “RDFI” (Receiving Depository Financial Institution), because it is receiving the payment from the ACH Operator. The job of the ACH Operator is to sort all those payments so that each one gets sent to the correct destination. ![]() The ODFI most likely combines the payments from the utility with similar payments from other companies and then sends that combined file to an “ACH Operator.” There are two ACH Operators: the Federal Reserve and The Clearing House. The utility’s bank is the “ODFI” (Originating Depository Financial Institution). The electric company continues the process by sending your payment, along with payments from other customers, to its bank. Either way, the utility will follow your instructions, and when time comes for them to collect the money, they become the “Originator,” because they are originating an ACH payment. Or you might go to the utility’s website each month and authorize a single payment. You might have a standing authorization for the utility to withdraw the payment each month from your bank or credit union account. ![]() For ACH debits, let’s use the example of paying your electric bill. ![]()
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