What an SEC code is
SEC stands for Standard Entry Class. Every batch in an ACH file carries one three-letter SEC code in its header. The code tells the banks three things:
- whether the account on the other side belongs to a person or a business,
- how the payment was authorized, and
- which rules and return rights apply.
The code is not a formality. Using a business code on a consumer’s account, for example, is a reason for the payment to be returned as R05.
The SEC codes a small business meets
| Code | Name | Use it for | Debit or credit | How it is authorized |
|---|---|---|---|---|
| PPD | Prearranged Payment and Deposit | Payments to or from a person: payroll, bills | Both | Debits: in writing. Direct deposit: can be oral or non-written |
| CCD | Corporate Credit or Debit | Payments between businesses | Both | An agreement between the two businesses |
| CTX | Corporate Trade Exchange | Business payments with a lot of remittance detail | Both | An agreement between the two businesses |
| WEB | Internet-Initiated/Mobile Entry | Consumer debits authorized online. Person-to-person credits | Both | Online, with an electronic signature or equivalent |
| TEL | Telephone-Initiated Entry | Consumer debits authorized by phone | Debit | A recorded call, or written notice confirming it |
| IAT | International ACH Transaction | A payment that is the US part of an international payment | Both | As for the matching domestic payment |
The next sections take the five everyday codes one at a time.
PPD: Prearranged Payment and Deposit
PPD is the code for payments to or from a person’s account, such as payroll and bills.
- Debit or credit: both.
- How it is authorized: a debit must be authorized in writing. Direct deposit can be authorized orally or in another non-written way.
Direct deposit of pay is a PPD credit. A monthly bill taken from a personal account, with a signed authorization, is a PPD debit. To collect by PPD debit, get the signed form first. The ACH authorization form is made for this.
CCD: Corporate Credit or Debit
CCD is the code for payments between businesses, such as paying a supplier or collecting from a business customer.
- Debit or credit: both.
- How it is authorized: by an agreement between the two businesses.
A CCD payment can carry one addenda record with remittance details. With that record it is sometimes written CCD+. The file format guide shows how CCD, CCD+ and CTX carry remittance detail.
PPD vs CCD: the difference that matters
| PPD | CCD | |
|---|---|---|
| Account on the other side | Consumer | Business |
| Authorization for a debit | Signed or similarly authenticated, in writing | An agreement. The business agrees to be bound by the Nacha rules |
| Addenda records | One, optional | One, optional |
| Window to return an unauthorized debit | 60 calendar days | 2 banking days |
| Return code for “not authorized” | R10 or R11 | R29 |
If you are not sure whether a customer’s account is personal or business, ask. A sole proprietor often pays from a personal account, and that needs a consumer authorization.
CTX: Corporate Trade Exchange
CTX is the code for business payments that need a lot of remittance detail.
- Debit or credit: both.
- How it is authorized: by an agreement between the two businesses.
A CTX payment can carry up to 9,999 addenda records. A CCD payment carries at most one. See how CCD, CCD+ and CTX carry remittance detail.
WEB: Internet-Initiated/Mobile Entry
WEB is the code for consumer debits authorized online, for example when a customer enters bank details at an online checkout. It is also the code for person-to-person credits.
- Debit or credit: both. A WEB credit is a person-to-person payment.
- How it is authorized: online, with an electronic signature or equivalent.
TEL: Telephone-Initiated Entry
TEL is the code for consumer debits authorized by phone.
- Debit or credit: debits only.
- How it is authorized: in a recorded call, or with written notice that confirms it.
WEB and TEL: authorization at a distance
WEB and TEL exist because the customer is not in front of you signing a form.
- WEB debits must be authorized through the internet or a wireless network. The business must check the account number the first time it is used, with a method such as a prenote, micro-deposits or a validation service.
- TEL debits are authorized in a phone call. For a single payment, the business records the call or sends written confirmation. For recurring payments, it must give the customer a copy of the authorization.
Since September 17, 2021, a customer who has given a standing authorization can start each later payment by phone or online, and the business may use TEL or WEB for those payments.
IAT: international payments
An IAT entry is the US part of an international payment. It carries extra information so banks can screen it against sanctions lists. IAT payments cannot be sent as Same Day ACH. If a payment that is really international is sent with a domestic code, it can come back as R85.
Nacha rewrote the definition of an IAT entry effective September 18, 2026. If you send or receive money across borders, ask your bank how the new definition applies to you. See international ACH transfers.
Codes for checks turned into ACH payments
A business can turn a paper check into an ACH debit. Each situation has its own code, and each requires telling the customer before taking the check.
| Code | Name | When it is used |
|---|---|---|
| ARC | Accounts Receivable Entry | A check received by mail, at a lockbox or a drop box, for a bill |
| BOC | Back Office Conversion | A check handed over at the counter and converted later in the back office |
| POP | Point-of-Purchase Entry | A check converted at the counter while the customer is there |
| RCK | Re-presented Check Entry | A bounced check collected again as an ACH debit |
Where the SEC code appears
In the ACH file, the SEC code is in positions 51 to 53 of each batch header. All payments in a batch share it. To see the code in a file you have, open it in the ACH file viewer. The full layout is in the NACHA file format guide.
Common mistakes
- CCD to a personal account. If the consumer objects, the payment is returned as R05 and counts as unauthorized.
- PPD for a payment authorized online. Online authorization calls for WEB, which has its own account-checking duty.
- Sending an international payment as CCD or PPD. Use IAT.
- Assuming the code is your choice alone. Your bank or processor sets it based on how you collect authorization. Tell them the truth about your process.