What is the difference between ODFI and RDFI?
ODFI stands for Originating Depository Financial Institution, RDFI stands for Receiving Depository Financial Institutions, and they each have a slightly different function in processing an ACH transfer. The biggest takeaway is that the ODFI is the financial institution where the ACH entry request is originally placed.
What is a 3rd party service provider?
A third-party service provider is generally defined as an external person or company who provides a service or technology as part of a contract.
What is a 3rd party ACH sender?
A third party sender is a type of third party service provider that acts on behalf of the originator only. In other words, it is an intermediary between the originator and the ODFI. In this type of relationship, there is generally no contractual agreement between the ODFI and the originator.
What is an example of a third party sender?
Scenario 1 – Payroll Processor In this scenario, your financial institution is the ODFI, the Accounting/CPA firm is a Third-Party Sender, and the different companies are the originators.
What is the ODFI responsible for?
Verify Compliance with ACH Data Security Requirements – An ODFI is responsible for security compliance by its Originators, Third-Party Senders and Third- Party Processors. An ODFI has to perform due diligence to establish reasonable belief that parties have the capacity to meet their security obligations.
What is an ACH RDFI?
An RDFI is a bank or credit union that has an agreement with an ACH Operator to receive entries. They act on behalf of their customers when receiving these entries from the ACH Operator. The ACH Operator is either the Federal Reserve or The Clearing House.
What are the three service provider types?
The three service types are recognized by the IT industry although specifically defined by ITIL and the U.S. Telecommunications Act of 1996.
- Type I: internal service provider.
- Type II: shared service provider.
- Type III: external service provider.
What is the difference between vendor and service provider?
A vendor is a subset of a third-party, including those entities with whom the institution has a contract or conducts commerce. A third-party service provider describes a subset of vendors who provide outsourced services for the institution.
Is a payroll company a third party sender?
In this example, the employer would be the Originator sending payments to employees, and the payroll processing company would be a third-party sender facilitating those payments through its relationship with an ODFI. The use of payments intermediaries to originate ACH transactions is becoming increasingly common.
What does ODFI request mean?
ODFI Request for Return (ODRR) – Used by the originating depository financial institution (ODFI) to request the receiving depository financial institution (RDFI) return an ACH entry. If you need to send an ODRR, submit an exception request to the Federal Reserve Banks.