AAP Authorization Requirements 2 — Questions and Answers
Question 1: For CCD entries (business-to-business ACH), what type of authorization is required?
- A written agreement between the trading partners, though the format is flexible (Correct answer)
- A consumer-style written authorization with signature
- Verbal authorization is sufficient for business accounts
- A NACHA-approved authorization form specific to CCD
Correct answer: A written agreement between the trading partners, though the format is flexible
CCD entries require a written agreement between the Originator and Receiver, but NACHA does not prescribe a specific format for business-to-business authorizations.
Question 2: An authorization for recurring PPD debits must notify the consumer of:
- The right to stop payment and the procedure to exercise that right (Correct answer)
- The exact dollar amounts for every future debit in the series
- The ODFI's name, routing number, and contact information
- The ACH Operator's processing schedule and cutoff times
Correct answer: The right to stop payment and the procedure to exercise that right
NACHA requires that recurring debit authorizations inform consumers of their right to stop payment and how to exercise that right, protecting consumer interests.
Question 3: When an Originator changes a Receiver's recurring debit amount from the amount previously disclosed, notice must be provided at least:
- 7 calendar days before the scheduled debit (Correct answer)
- On the same day as the debit occurs
- 30 days before the new amount is debited
- No advance notice is required if within 10% of prior amount
Correct answer: 7 calendar days before the scheduled debit
NACHA rules require Originators to notify consumers at least 7 calendar days in advance when the debit amount will vary from the amount stated in the authorization.
Question 4: For POP entries, what must an Originator provide to the consumer at the point of purchase?
- A receipt and clear notice that the check will be converted to an ACH debit entry (Correct answer)
- A copy of the NACHA Operating Rules for consumer reference
- A written authorization for all future debit entries
- The merchant's ODFI name and ACH company ID
Correct answer: A receipt and clear notice that the check will be converted to an ACH debit entry
For POP entries, the Originator must provide the consumer with a receipt and prominent notice that their check will be converted to an ACH debit and is not their original check.
Question 5: International ACH Transactions (IAT) require the Originator to include in mandatory addenda:
- Details about the foreign financial institution and cross-border payment information (Correct answer)
- Only the Receiver's IBAN number in place of the routing number
- A SWIFT code substituted for the RDFI routing number
- Dual-currency authorization signed by both parties
Correct answer: Details about the foreign financial institution and cross-border payment information
IAT entries require multiple mandatory addenda records containing detailed information about the originating and receiving financial institutions and cross-border payment details.
Question 6: An electronic authorization for WEB entries is valid if it:
- Is logically associated with the consumer's account information and can be reproduced in paper form (Correct answer)
- Includes a digital certificate issued by a NACHA-approved certificate authority
- Is confirmed via SMS text message to the consumer's mobile number
- Meets PCI-DSS Level 1 certification standards
Correct answer: Is logically associated with the consumer's account information and can be reproduced in paper form
NACHA requires that electronic authorizations for WEB entries be logically associated with the account information and capable of being reproduced in a readable paper format.
AAP Authorization Requirements 2
For CCD entries (business-to-business ACH), what type of authorization is required?