“Pay no attention to the man behind the curtain.”

I love that quote on so many levels.  What’s funny to me is that for the most part I don’t think we normally pay much attention to the man behind the curtain.  As an example, think about a live concert or movie or performance of some kind.  We just want to enjoy the event.  We don’t have any idea what has to happen on the backside to make it happen.  As far as we know, it just happens.

 

So how does that translate to ACH?  Do you know what has to happen in the background to make sure your transactions are processed on time?  Most people don’t, they just know it happens.

 

There are many parties behind the scenes making it happen though.  Today, we are tugging aside the curtain to take a peek at the ODFI …

 

The ODFI is the gateway into the ACH Network.  The long and short of it is, through their doors pass essentially all ACH transactions…with few exceptions.  And the ODFI is responsible for every last one of them.

 

We have already learned a bit about the ODFI in previous posts, but did you know the ODFI warrants that their Originators obtain and maintain an authorization for every ACH transaction?  Did you know the ODFI warrants that all information contained in every ACH transaction is accurate?  Did you know that the ODFI is responsible for everything their Originators do?

 

With such huge responsibilities, it should come as no surprise that ODFIs maintain the longest list of warranties of all parties to an ACH transaction. So, what are some of their other responsibilities?

 

Among other things, ODFIs warrant that they will:

 

          Bind their Originator to the ACH Rules

          Ensure their Originators follow the ACH Rules

          Process transactions (and returns) in a timely manner

          Notify their Originators of Returns and NOCs

          Retain records for 6 years

          Perform an Annual ACH Audit

          Indemnify all the other parties should something go wrong

 

Those are just the biggies.  The list goes on.

 

No matter what happens, remember, there will always be ODFIs behind the curtain, pulling levers and spinning wheels and taking care of business.  That’s it, the peek is over.  The next time a transaction is processed in a timely manner; remember it’s not magic.  Some ODFI was just doing their job…behind the curtain.