ACH Authorization Requirements – Seamless Chex

1. What is an ACH Authorization?

An ACH authorization is a legally binding agreement that permits a merchant (Originator) to debit or credit a customer’s bank account using the ACH network. Authorization must be obtained prior to initiating any transaction, and proper documentation must be retained in accordance with NACHA rules.

2. Types of ACH Authorizations

Transaction Type	Accepted Authorization Format
Recurring Debit	Written or electronic
Single Debit	Written, electronic, or oral*
Credit	No authorization required, but best practice is to document intent
Telephone (TEL)	Oral (must be recorded or confirmed in writing)
Internet/Web (WEB)	Electronic authorization through a secure, authenticated session
Prearranged Payment and Deposit (PPD)	Written or electronic (must be signed or electronically consented)

*Oral authorizations must be recorded or followed up with written confirmation and securely retained.

3. What You Must Provide to Paynote

To ensure your manual entry ACH processing setup is fully compliant with NACHA guidelines, you must submit the following to Paynote for review:

Sample authorization language for each ACH transaction type you plan to use (e.g., TEL, WEB, PPD, RCC). See Section 5 below.
Description of your customer authorization flow, including how and where the authorization is presented (e.g., phone script, online form, checkout screen, etc.)

If you update your authorization process at any time, please notify Paynote and provide the revised materials for review.

4. Required Elements for All ACH Authorizations

Ensure each authorization—regardless of format—includes the following

Customer's full name and bank account details
A clear statement authorizing the ACH debit/credit
Revocation terms: how and when the customer can cancel
Merchant’s contact information
Date of authorization
Retention for a minimum of 2 years

5. Specific Requirements by SEC Code (WEB, TEL, PPD, RCC)

5.1. WEB Transactions (Internet-Initiated Entry)

When collecting authorization for WEB ACH transactions, merchants must ensure the following items are clearly presented—either on the payment screen or in the Terms & Conditions:

5.1.1 Example Language

I authorize [Company Name] to initiate an ACH/electronic debit to my account in the amount of $XXX.XX from the bank account account (include routing and account number). I understand that I may revoke this authorization by calling or emailing [Phone Number / Email] at least [X] business days prior to the authorized processing date. I agree that the ACH transactions I authorize comply with all applicable laws.

AND/OR

[ ] I have reviewed and agree to the Terms and Conditions.

Screen 2 – Confirmation/Completed Payment Language

Thank you for your payment. The confirmation below verifies that you have authorized [Company Name] to initiate an electronic payment from your bank account.

Payment Confirmation Number: XXXXXX

Authorized Payment Amount: $XXX.XX

Date Authorized: MM/DD/YYYY

Expected Payment Date: MM/DD/YYYY

Best Practice: Provide a “Print” or “Save” link so customers can save this information securely. The merchant should also print or store a digital copy of this authorization for their records.

5.2 TEL Transactions (Telephone-Initiated Entry)

Authorization Requirements:

For one-time TEL debits: either an audio recording or written confirmation
For recurring TEL debits: both an audio recording and written confirmation

5.2.1 Sample Script (Audio Recording):

“[Customer Name], by providing your bank account information and verbal authorization today, [Date of Recording], you are authorizing [Merchant Name] to initiate a [One-Time or Recurring] ACH debit to your account ending in [Last 4 Digits] on [Date of Debit] in the amount of $[Amount].

You may revoke this authorization by contacting [Phone or Email] at least 3 business days before the scheduled debit.

Do you authorize [Merchant Name] to proceed with this payment?”

[Wait for Verbal “Yes”]

5.2.2 Sample Written Confirmation:

On [Date], you authorized [Merchant Name] by phone to initiate a [One-Time or Recurring] ACH debit to your account ending in [XXXX] in the amount of $[Amount]. You may revoke this authorization by contacting us at [Phone/Email] at least 3 business days prior to the payment date.

5.3 PPD Transactions (Preauthorized Consumer Debit)