Understanding SEC Codes in ACH Transactions

When processing ACH (Automated Clearing House) payments in the United States, each transaction must include a Standard Entry Class (SEC) Code. These codes aren’t just regulatory requirements—they’re critical in specifying how a transaction was authorized and processed, directly impacting risk, compliance, and dispute resolution.

What Are SEC Codes?

SEC Codes are identifiers defined by NACHA (the National Automated Clearing House Association) that indicate the authorization method used for an ACH transaction. Each code helps define:

The origin of the transaction (e.g., phone, web, in-person)
The type of party involved (consumer or corporate)
The authorization format (written, verbal, digital)
Applicable rules for returns and disputes

If the SEC code is not provided in the transaction message, Forte will default to the appropriate option based on the integration method—usually PPD or WEB (note: Secure Web Pay (SWP) always defaults to WEB and cannot be changed).

This defaulting may not always reflect the actual authorization method, and incorrect codes can expose merchants to automatic losses in disputes or compliance issues.

Why Are SEC Codes Important?

? Compliance with NACHA Rules
⚖️ Protecting Merchants in Disputes
? Ensuring Proper Risk Categorization
? Clear Audit Trails for Authorization Methods

For integrated partners, your platform should allow merchants to select the correct SEC code if multiple authorization methods are used. In some solutions, codes may be auto-assigned based on where the transaction takes place (e.g., customer portal vs. merchant portal).

How SEC Codes Work with Dex and SWP

Dex is your reporting and configuration hub. It manages and displays SEC code details on transactions and exports.
SWP (Secure Web Pay) uses WEB SEC code by default for all eCheck transactions. This is not configurable and reflects its nature as a consumer-initiated online payment form.
Custom integrations using Forte’s APIs can (and should) define SEC codes programmatically.

Common SEC Codes and Their Use Cases

SEC Code	Name	Used For	Key Requirements
PPD	Prearranged Payment and Deposit	Direct Deposits and Preauthorized Bill Payments (consumer)	Can be single or recurring; written authorization required
WEB	Internet-Initiated Entry	Consumer ACH debits authorized online	Must be authorized via the internet; credit only for reversals
TEL	Telephone-Initiated Entry	One-time consumer payments via phone	Verbal authorization; must record or send written confirmation
CCD	Corporate Credit or Debit	B2B transfers	Written authorization between businesses required
POS/POP	Point-of-Sale / Point-of-Purchase	In-person check or card payments	Customer present; copy of check/card returned to user
ARC	Accounts Receivable Conversion	Checks received by mail	Not valid for corporate checks or drop-box submissions
RCK	Re-presented Check Entry	Bounced check re-presentment	Must notify customer at POS; retry for NSF checks only

Recommendations for Integrated Partners

Allow merchants to manually choose SEC codes based on transaction type.
Auto-assign SEC codes only if your platform can accurately distinguish authorization types.
Ensure documentation and training support proper SEC code usage.
Keep proof of authorization for at least 2 years, especially for TEL and WEB.

Final Thoughts

Using the correct SEC code is not optional—it’s foundational. It ensures merchants stay compliant, reduces liability, and strengthens dispute protection. Whether you’re using Dex, Secure Web Pay, or a custom API integration, understanding and correctly applying SEC codes is essential to successful ACH processing.

For more support, explore our in-depth guides or contact the Forte team. We're here to help you navigate every transaction with clarity and confidence.

Please refer to the updated Solutions:

What are SEC Codes?