AAP SEC Codes and Entry Types 2 — Questions and Answers
Question 1: The IAT SEC code is required when:
- A payment transaction involves a financial agency outside the United States (Correct answer)
- Any international wire transfer is processed
- A foreign currency is used in any ACH transaction
- A cross-border PPD entry is sent to Canada
Correct answer: A payment transaction involves a financial agency outside the United States
IAT (International ACH Transaction) must be used whenever an ACH payment involves a financial agency outside the territorial jurisdiction of the United States.
Question 2: CTX entries differ from CCD entries primarily because CTX:
- Supports up to 9,999 addenda records for corporate trade exchange data (Correct answer)
- Is used only for consumer deposit accounts
- Requires same-day settlement by rule
- Is limited to credit entries only
Correct answer: Supports up to 9,999 addenda records for corporate trade exchange data
CTX (Corporate Trade Exchange) supports up to 9,999 addenda records, allowing detailed remittance information to accompany business-to-business payments.
Question 3: BOC (Back Office Conversion) entries are created from:
- Checks collected at the point of sale and converted during back-office processing (Correct answer)
- Online banking check images submitted by consumers
- Wire transfer instructions converted for ACH clearing
- Returned ACH items re-processed as new entries
Correct answer: Checks collected at the point of sale and converted during back-office processing
BOC is used when a source document (check) is collected at the point of sale but conversion to an ACH debit occurs later in back-office processing rather than at the register.
Question 4: RCK entries are used to re-present:
- Returned consumer checks (NSF) as ACH debit entries (Correct answer)
- Rejected ACH batches for reprocessing
- Corporate wire rejections as ACH credits
- International check conversions for clearance
Correct answer: Returned consumer checks (NSF) as ACH debit entries
RCK (Re-presented Check Entry) allows Originators to re-present a check that was returned for insufficient or uncollected funds as an ACH debit entry.
Question 5: The MTE SEC code is used for:
- Machine transfer entries (ATM transactions) processed through the ACH network (Correct answer)
- Mobile telephone-initiated entries
- Multi-transaction batch entries
- Merchant terminal electronic payments
Correct answer: Machine transfer entries (ATM transactions) processed through the ACH network
MTE (Machine Transfer Entry) is the SEC code for ATM transactions that are processed through the ACH network.
Question 6: When a consumer's check is received via a lockbox for conversion to an ACH debit, which SEC code applies?
- ARC (Accounts Receivable Conversion) (Correct answer)
- BOC (Back Office Conversion)
- POP (Point-of-Purchase)
- TEL (Telephone-Initiated Entry)
Correct answer: ARC (Accounts Receivable Conversion)
ARC is the correct SEC code for checks received via mail or lockbox (not at a physical point of purchase) that are converted to ACH debit entries.
AAP SEC Codes and Entry Types 2
The IAT SEC code is required when: