InfoSight Spotlight: Third Party Senders

NACHA, the Electronic Payments Association, amended its Operating Rules to require Originating Depository Financial Institutions (ODFIs) to identify and register their Third-Party Sender members. However, even credit unions that do not conduct third-party origination are still required to register and acknowledge that in a statement to NACHA. These changes become effective on Sept. 29, 2017, which is the day the registry opens. Credit unions have an implementation period through March 1, 2018, to register all of their Third-Party Senders.

Exemption: If the credit union is not an Originating Depository Financial Institution (ODFI) this registration requirement would not apply.

A Third-Party Sender serves as an intermediary between the company originating the ACH payment and the Originating Depository Financial Institution (ODFI) of that transaction. A key point that differentiates a Third-Party Sender from other third parties is that it sends the payment on behalf of its client through its own financial institution as opposed to the financial institution of the client, or Originator – this means that the Third-Party Sender is the customer of the ODFI and the ODFI does not have a direct business relationship with the Originator of the transaction.

When a Third-Party Sender is sending payments through its ODFI on behalf of another Third-Party Sender, that ODFI has the ultimate responsibility for those payments. For that reason, it is important that a financial institution knows that customer and whether it is a Third-Party Sender.