ACH payments are a type of electronic payment that moves funds between bank accounts within the United States. ACH is ideal for direct deposit of payroll, recurring bill payments, online purchases, or person-to-person transfers. ACH payments are also often less expensive than wire transfers, with lower or no transaction fees.

For ACH to work, there must be an authorized agreement between the originator and the receiver. An authorized agreement means that the receiver has consented to exchange funds with the originator. 

Once you submit an ACH transaction, KeyBank begins verifying the request and batching it for processing. After verification, files are collected and transmitted to the ACH Operator, the central clearing facility managed by the Federal Reserve Bank.

During this process, you can use the ACH Inquiry API to view the status, or set up ACH status notifications with webhooks.

ACH statuses

Statuses for ACH transactions are:

• Collected - KeyBank successfully consolidates and batches the ACH transactions, ready to send them to the ACH Operator for payment processing.
• Settled - The ACH Operator receives the transaction and begins to process the payment with the receiver's financial institution. Settlement occurs nightly.
• Returned – The transaction could not be processed, often due to an issue like insufficient funds. The request is returned to originator with details. KeyBank recommends that you inquire about returns daily with the ACH Inquiry API.

Use the ACH Origination API to send or collect payments. With this API, you can:

• Make same-day payments until 3:00 p.m. EST.
• Send 10 transactions or batch up to 100 transactions per ACH request.
• Undo a payment before collection.

SEC codes

You select the payment type using the SEC code, which tells the KeyBank ACH API what kind of transaction you are initiating—such as business-to-business, consumer, online, or phone-based.

ACH PAYMENT TYPES

Addenda records

Addenda records have additional payment data like remittance information. You can use the ACH Origination API to request additional information about a transaction. It is primarily used for business-to-business transactions, like with SEC codes CCD or CTX.

This is an available option in case you need addenda information to help identify an electronic payment to the receiving financial institution and the receiver, or to get information about a related prior entry detail record.

If you request addenda records, you can review the status of information retrieval. As the system collects the records, the status is Waiting. Then, when the system successfully receives the addenda records, the status changes to Completed.

Undo a payment

When you undo a transaction, you stop the request from reaching the ACH Operator. This has to be done prior to the collection window (see ACH schedules). The typical window to undo a payment is about 10 minutes. If you missed the window to undo a payment, you can attempt to reverse the transaction (within 5 banking days from the original effective date).

Reverse payment

When you reverse a transaction, you missed the window to undo a request. You can reverse the transaction within 5 banking days from the original effective date.

When you reverse the transaction, it pulls back payments that were originated erroneously. While reversals are not a guaranteed success, it is an option to undo the original payment submitted after collection.

To reverse a payment, you have one of three options. Only one reversal method can be used per transaction; if the first attempt fails, alternative methods cannot be used.

1. Option 1: Submit the file maintenance form for a payment reversal. Please visit KeyNavigator Online Help or contact your Payments Advisor for this form.
2. Option 2: Use ACH Direct to reverse a payment. You can search for the transaction by batch or account. Reversals are available within 5 banking days of the effective date for the current transactions. After you submit this request, the status for the transaction will be pending until it is fully processed as reversed.
3. Option 3: Complete an ACH Originate API request with the opposite credit or debit indicator in the creditDebitCode field of the request body. Update the companyEntryDescription in the request body to reflect REVERSAL.

ACH schedules

ACH transactions are consolidated, collected, and distributed several times throughout the day. You must submit ACH transactions before KeyBank’s final cutoff time at 9:00 PM EST for standard next day settlement.

• Consolidation window: Files are converted to Nacha file records, consolidated, and prepared for collection.
• Collection window: ACH transactions have been successfully received by KeyBank and are ready for the ACH Operator for payment processing.
• Distribution window: The ACH Operator processed the payments and is ready for settlement from the receiver's financial institution. A transaction posts on the date specified in the effectiveDate parameter within the originating request.

STANDARD ACH SCHEDULE

All the times listed are for the Eastern time zone (EST).

SAME-DAY ACH SCHEDULE

All the times listed are for the Eastern time zone (EST).