Simplified Scenarios Involving Third-Party Senders

Simplified Scenario 1 – Payroll Processing 

The Employer has a contract with a Payroll Processor to provide payroll services on behalf of the Employer.

  • The Payroll Processor initiates a debit to the Employer, according to the terms of its contract, to obtain funding for payroll.

    • The Employer and Payroll Processor are the direct parties to the funding debit. (Employer owes funds to the Payroll Processor.)
    • The Payroll Processor is the Originator of the debit.
    • The Employer is the Receiver of the debit.
  • The Payroll Processor initiates the Employer’s payroll credits to employees via the Payroll Processor’s own account/ODFI.

    • The Employer and Employee are the direct parties to the payroll credit. (The Employer owes wages to the Employee.)
    • The Employer is the Originator of the credit.
    • The Employee is the Receiver of the credit.
    • The Payroll Processor is a Third-Party Sender because it (rather than the Employer) has the Origination Agreement with the ODFI.

The Payroll Processor is the Originator for the funding debit and the Third-Party Sender for the payroll credits.

Simplified Scenario 2 – Tuition Processing 

The University enters into an agreement with a Tuition Processor to act as the University’s exclusive provider for the processing of online tuition payments.

  • On behalf of the University, the Tuition Processor obtains the students’ authorizations and initiates (via its own financial institution) debits for the collection of students’ tuitions.

    • The University and Students are the direct parties to the tuition debit. (The Students owe tuition to the University.)
    • The University is the Originator of the debit (and should be identified as such in the authorization that the Tuition Processor obtains on the University’s behalf).
    • Students are the Receivers of the debits.
    • The Tuition Processor is a Third-Party Sender because it (rather than the University) has the Origination Agreement with the ODFI.
  • The Tuition Processor initiates ACH credits to the University for the aggregate amount of the tuition payments it has collected, less its service fees and charges.

    • The Tuition Processor and University are the direct parties to the credit for aggregated tuition amounts (the proceeds from the tuition payments are owed to the University).
    • The Tuition Processor is the Originator of the credit.
    • The University is the Receiver.

The Tuition Processor is a Third-Party Sender for the tuition debits and an Originator for the funding credit to the University.

Simplified Scenario 3 – Homeowners Association (HOA) Dues 

A Homeowners Association (HOA) enters into an agreement with a Property Manager to collect HOA dues from the Homeowners on a recurring basis.

  • On behalf of the HOA, the Property Manager obtains the Homeowners’ authorization and initiates debits (via its own financial institution) for the collection of HOA dues.

    • HOA and Homeowners are the direct parties to the debit for the HOA dues. (Homeowners owe dues to the HOA.)
    • The HOA is the Originator of the debit (and should be identified as such in the authorization that the Property Manager obtains on the HOA’s behalf).
    • The Homeowner is the Receiver of the debit.
    • The Property Manager is a Third-Party Sender because it (rather than the HOA) has the Origination Agreement with the ODFI.
  • The Property Manager initiates the ACH credit to the HOA for the aggregate amount of the dues it has collected from the Homeowners, less its service fees and charges.

    • The Property Manager and HOA are the direct parties to the credit for aggregated HOA dues amounts (proceeds from the dues payments are owed to the HOA).
    • The Property Manager is the Originator of the credit.
    • The HOA is the Receiver.

The Property Manager is a Third-Party Sender for the debits of the HOA dues and the Originator for the funding credit to the HOA.

Simplified Scenario 4 – Property Management Vacation Rental 

A Property Manager has an agreement with an Owner of a vacation property to rent that property. The Property Manager markets the property and obtains rental agreements from Renters. The rental agreement includes an ACH payment option, in which the Renter authorizes the Property Manager to initiate an ACH debit to his account. The Owner and Renter are not identified to each other in the rental agreement, have neither direct agreement nor obligations to one another. The Owner and Renter have separate agreements with the Property Manager.

  • The Property Manager debits the Renter for the rent due, according to the terms of the rental contract.

    • The Property Manager and Renter are the direct parties to the debit. (The Renter owes rent to the Property Manager.)
    • The Property Manager is the Originator of the debit.
    • The Renter is the Receiver.
  • The Property Manager initiates the ACH credit to the Owner for the aggregate amount of the rental proceeds it has collected from the Renters, less its service fees and charges.

    • The Property Manager and Owner are the direct parties to the credit for aggregated rental fees (proceeds from the rental payments that are owed to the Owner).
    • The Property Manager is the Originator of the credit.
    • The Owner is the Receiver.

The Property Manager is the Originator for the debit to Renter and is the Originator for the credit to the Owner.