Third-Party Senders play an important and valuable role in helping businesses and other organizations benefit from originating ACH payments for services such as paying employees, bills or vendors with ACH credit payments; or collecting rent, homeowners’ association (HOA) dues, tuition or other payments with ACH debits.
A Third-Party Sender serves as an intermediary between the company originating the ACH payment and the Originating Depository Financial Institution (ODFI) of that transaction. A key point that differentiates a Third-Party Sender from other third parties is that it sends the payment on behalf of its client through its own financial institution as opposed to the financial institution of the client, or Originator – this means that the Third-Party Sender is the customer of the ODFI and the ODFI does not have a direct business relationship with the Originator of the transaction.
When a Third-Party Sender is sending payments through its ODFI on behalf of another Third-Party Sender, that ODFI has the ultimate responsibility for those payments. For that reason, it is important that a financial institution knows that customer and whether it is a Third-Party Sender.
Properly identifying Third-Party Senders helps to carefully balance continued innovation and business opportunities with sounds risk management – to benefit of all ACH stakeholders.
Additional Third-Party Sender resources and education can be found on the NACHA eStore or by contacting a Regional Payments Association. Financial institutions are encouraged to obtain their own legal counsel regarding their obligations under the NACHA Operating Rules and other applicable legal requirements.