ACH at Lithic

How Lithic offers ACH to our customers

Lithic enables our customers to receive and initiate ACH originations with the following features:

  • Next-Day ACH: Lithic has access to all six ACH windows, enabling us to process next-day ACH on non-holiday weekdays

  • Same Day ACH support: Lithic also supports same-day ACH transactions on non-holiday weekdays.

  • Frequent ACH uploads: Lithic uploads ACH files to the ACH network every hour; we are not limited to upload schedules of partner banks or other intermediaries who may only upload once or twice a day

  • Fast ACH postings: Lithic receives ACH receipts directly from the ACH network six times a day instead of through an intermediary bank or third party. We process these receipts immediately and update balances based on the instructions in the file. In some cases, the ACH network or the sender may forward date a receipt, in which case Lithic will post the ACH transaction as pending before clearing it as settled on the settlement date specified by the file. This often happens when a same-day ACH misses a bank's cutoff and is sent to Lithic as a next-day ACH

  • Customizable ACH files: Lithic directly generates ACH files, enabling us to customize certain ACH fields such as transaction description and company id

To get started on ACH, customers can provide their Financial Account's routing number and bank account number to receive ACH transactions or use the Payments API to originate ACH transactions. ACH receipts and credit originations are immediately posted to the available balance of Financial Accounts. ACH debit originations are posted to the pending balance of Financial Accounts and are then released to the available balance. See more on balance updates in ACH Payment Lifecycle

Customers can work with their implementation manager to set a 1-4 day hold on ACH debits to control when funds are released. By default, funds are held for 2 days.

Please note that currently, Lithic does not support cancelling an ACH payment after it's been originated.

ACH Settlement Times

ACH Originations/Receipts at Lithic will follow the FedACH processing schedule for any ACH with Lithic Accounts. This means:

Same Day Originations

Processed By TimeSettlement TimeRelease Time (Debits only)
10:30 AM ET (on T)1:00 PM ET (on T)1:00 PM ET (on T+2)
2:45 PM ET (on T)5:00 PM ET (on T)5:00 PM ET (on T+2)
4:45 PM ET (on T)6:00 PM ET (on T)6:00 PM ET (on T+2)

Note: Same Day Originations must be received by 4:15 PM ET in order to be processed by the 4:45 PM ET window.

Next Day Originations

Processed By TimeSettlement TimeRelease Time (Debits only)
Before 2:15 AM ET (on T)8:30 AM ET (on T)8:30 AM ET (on T+2)
After 2:15 AM ET (on T)8:30 AM ET (on T+1)8:30 AM ET (on T+3)

Note: Next Day Originations must be received by 1:45 AM ET in order to be processed by the 2:15 AM ET window.

Receipts

Receipts will follow the same schedule as above, but the timing will be dependent on when the Originating Depository Financial Institution submitted the ACH for processing and Lithic has received the ACH entry.

SEC Codes

The Standard Entry Class (SEC) code is a three-letter code that identifies the type of ACH entry being made. It’s a required field used to classify transfers by their purpose or intended use. The full list of codes is maintained by NACHA, but at Lithic we offer the following:

CodeDescriptionRDFI Bank Account Type
PPDPrearranged Payment and DepositConsumer
CCDCorporate Credit or Debit EntryNon-Consumer
WEBInternet Initiated/Mobile EntryConsumer

It's important to use the correct SEC code, as ACH payments can be returned if the improper SEC code is used. Consumer vs Non-Consumer payments also impact how the RDFI can process a return.

ACH Return Reasons

When an ACH origination is returned by either the receiving bank or the receiver, Lithic also receives a reason return code that describes the reason for the return. These codes are also maintained by NACHA.

The table below lists the most common return reason codes, a description of each code, the types of bank accounts that can submit this return, and how many days the receiving bank / the receiver has to submit the return.

In addition, its lists the effect that receiving the return code will have on status of the Lithic External Bank Account object. Lithic automatically updates these statuses to adhere to NACHA guidelines. See External Bank Accounts to learn more.

Return Reason CodeDescriptionRDFI Bank Account TypeTime FrameEffect on EBA status
R01Insufficient funds. The receiver does not have sufficient available balance to cover the ACH debit originationConsumer or Non-Consumer2 Banking DaysNone
R02Account closed. A previously active account has been closed by either the receiver or the receiving bankConsumer or Non-Consumer2 Banking DaysCLOSED
R03No account / unable to locate account. The account number provided is valid but the account number does not correspond to the individual identified in the ACH transaction or the account number is not an existing accountConsumer or Non-Consumer2 Banking DaysCLOSED or FAILED_VERIFICATION (if micro deposit or prenote)
R04Invalid Account Number Structure. The account number is not validConsumer or Non-Consumer2 Banking DaysPAUSED
R05Unauthorized debit to consumer account using corporate SEC code. CCD or CTX debit origination was transmitted to a consumer account or was not authorized by the receiverConsumer60 Calendar DaysPAUSED
R06Returned per originating bank request (i.e., Lithic's bank partners). This generally happens due to an error in the origination fileConsumer or Non-ConsumerDetermined by originating and receiving bankPAUSED
R07Authorization revoked by customer. The receiving customer revoked a previous authorization for their account to be debited by youConsumer60 Calendar DaysPAUSED
R08Payment Stopped. The receiving bank has placed a stop payment order on an ACH debit originationConsumer or Non-Consumer2 Banking DaysPAUSED
R09Uncollected Funds. The total balance (also known as the ledger balance) of the bank account is enough to cover the ACH debit origination but not the available balanceConsumer or Non-Consumer2 Banking DaysNone
R10Customer Advises Originator is Not Known To and/or Authorized by Receiver. This occurs when the receiver indicates they do not know you or has not given you authorization to debit their account. This is different from R07 which is when an existing authorization is revokedConsumer; Non-Consumer for ARC, BOC, IAT, or POP transactions60 Calendar daysPAUSED
R11Customer Advises Entry not in Accordance with the Terms of the Authorization. This occurs when the receiver has authorized you to debit their account but a specific ACH debit origination does not comply with the terms of your authorization agreement. For example, the amount debited was not the authorized amountConsumer. Non-Consumer for ARC, BOC, IAT, or POP transactions60 Calendar daysPAUSED
R13Invalid Routing NumberPAUSED
R14Representative Payee Deceased.Non-Consumer or Consumer2 Banking DaysPAUSED
R15Beneficiary or Account Holder DeceasedConsumer2 Banking DaysPAUSED
R16Account Frozen / Entry Returned per OFAC.Consumer or Non-Consumer2 Banking DaysPAUSED
R20Non-Transaction AccountConsumer or Non-Consumer2 Banking DaysPAUSED
R23Credit Entry Refused by ReceiverConsumer or Non-ConsumerReceiving bank must submit return within 1 banking day after receiving the refusal from the receiverPAUSED
R24Duplicate Entry, indicating the same transaction has been processed alreadyConsumer or Non-Consumer2 Banking DaysPAUSED
R29Corporate Customer Advises Not Authorized. A non-consumer receiver advised the receiving bank that a specific ACH origination was not authorizedNon-Consumer2 Banking DaysPAUSED

ACH Auth Rules

ACH Intelligent Receipts brings the power of Lithic's card authorization rules engine to our ACH offering. You can also think of them as Stop Payments.

ACH Auth Rules enable you to:

  • Decide whether or not you want to accept an ACH receipt on the basis of:
    1. Company name
    2. Company ID
    3. Amount
    4. Date range
  • Automatically return the payment if it fits outside your defined criteria
  • Control when credit receipts are not made available to your end users. We will pend funds and emit a new RELEASED event to make them available

ACH Auth Rules can be configured for qualifying customers during the onboarding process. ACH Auth Rules are turned off by default and must be explicitly reviewed and approved. Reach out to your Implementation manager to learn more.


What’s Next

Now that you understand the basics about offering, dig deeper in with ACH Payment Lifecycle