ACH ORIGINATION SERVICE TERMS
Section 1. THE SERVICE.
These ACH Origination Service Terms (the “Service Terms”) set forth the terms under which Customer
may originate Credit Entries and/or Debit Entries as an Originator through Bank by means of the
Automated Clearing House Network (“ACH”) to initiate electronic fund transfers to or from an Account
(the “Service”). The Service is also subject to the General Provisions of the Treasury Management Terms
and Conditions Agreement (the “Agreement”) as if fully incorporated herein and all Applicable Laws. In
the event of a conflict between these Service Terms and other terms in the Agreement, these Service
Terms shall control. Unless otherwise defined herein, any capitalized terms shall have the meaning as
set forth in the Agreement or the Nacha Operating Rules and Guidelines (the “Rules”), as applicable. Any
reference to the Agreement herein shall be deemed to include these Service Terms.z
Bank is willing to act as an Originating Depository Financial Institution (“ODFI”) with respect to ACH
Entries originated by Customer under these Service Terms. Each Entry shall be deemed Customer’s
Payment Order and authorizes Bank to initiate an electronic funds transfer on Customer’s behalf.
Section 2. TRANSMISSION OF ENTRIES BY CUSTOMER.
As part of the implementation process, Customer must designate its Administrator(s) in the Operational
Instructions. Customer’s Administrator(s) shall establish Customer’s Users who shall be authorized to
initiate Entries within the parameters as designated in the applicable Operational Instructions on behalf
of and selected by Customer and as otherwise restricted by Bank. Bank shall be entitled to deem any
person having knowledge of any Security Procedures assigned to Customer and required to initiate
Entries under the Agreement, to be a User (including any Administrator). Customer may also allow a
Third-Party Service Provider (as defined in the Rules) (a “TPSP”) to originate Entries as a User. Any TPSP
will be deemed Customer’s agent and Vendor, and Bank shall have no liability or responsibility for
monitoring Customer’s TPSP. Customer agrees to be obligated and liable for any Payment Order
submitted by a TPSP as if such Payment Order was submitted by Customer.
Customer shall transmit Entries to Bank through the Channel(s) indicated in the Operational Instructions
in compliance with the formatting and other requirements set forth in the file specifications provided by
Bank. Entries shall be transmitted to Bank no later than the applicable Cutoff Time, as specified in the
Bank’s Processing Schedule and Guidelines (as amended from time to time and which can be found on
Intellix or requested through Treasury Management Customer Solutions). Entries received after the
Cutoff Time shall be deemed to have been received on the next Business Day. For Same Day ACH Debit
origination, Customers must opt-in to the service on the Operational Instructions and such service must
be accepted and implemented by Bank.
The total dollar amount of Entries transmitted by Customer to Bank on any one Business Day shall not
exceed the amount of Available Funds in Customer’s Account as of the Effective Entry Date of the
Entries. Types of Entries that Customer may originate are up to the sole discretion of Bank and effective
after submission of the Operational Instructions and acceptance and implementation by Bank. Bank
reserves the right to limit the types and amount of the Entries processed under the Service.
Section 3. AUTHORIZATION; RECORDS RETENTION.
Customer shall obtain an authorization (“Authorization Agreement”) as required by the Rules from the
person or entity whose account will be debited or credited as the result of an Entry originated by
Customer. Customer shall retain the Authorization Agreement in original form while it is in effect and
the original or a copy of each Authorization Agreement for two (2) years after termination or revocation
of such Authorization Agreement or as otherwise required by the Rules. Upon request, Customer shall
immediately furnish the original or a copy of the Authorization Agreement to Bank. Specific
requirements for the Authorization Agreement for each SEC Code are outlined in the Rules.
Section 4. PROCESSING, TRANSMITTAL, AND SETTLEMENT BY BANK.
Except as otherwise provided for in the Agreement, if Bank elects to accept Entries and Customer
otherwise complies with the term of the Agreement, Bank shall use commercially reasonable efforts to
comply with the instructions of Customer to: (a) process Entries received from Customer to conform
with the file specifications set forth in the Rules, (b) transmit such Entries as an ODFI to the ACH
processor selected by Bank, (c) settle for such Entries as provided in the Rules, and (d) in the case of a
Credit Entry received for credit to an Account with Bank (“On-Us Entry”), Bank shall credit the Receiver’s
account in the amount of such Credit Entry on the Effective Entry Date contained in such Credit Entry.
Customer agrees that the ACH processor selected by Bank shall be considered to have been selected by
and designated by Customer and shall be Customer’s agent and Vendor for purposes of the Agreement.
Section 5. SETTLEMENT OF CREDIT ENTRIES AND RETURNED DEBIT ENTRIES.
Customer authorizes Bank to debit its Account(s) to initiate electronic funds transfers for all Credit
Entries issued by Customer or otherwise made effective against Customer. Customer agrees to pay for
the amount of such electronic funds transfer no later than such time on the Effective Entry Date of such
Credit Entries and each On-Us Entry as Bank, in its discretion, may determine. Customer shall settle with
and pay Bank for the amount of each Debit Entry returned by a Receiving Depository Bank (“RDFI”) or
Debit Entry dishonored by Bank. Settlement shall be made by Customer to Bank in any manner specified
by Bank. Customer hereby agrees that Bank is authorized to charge the Account(s) designated by
Customer in the applicable Operational Instructions (“Authorized Account(s)”) as settlement for Credit
Entries issued by Customer or returned or dishonored Debit Entries; provided, that if insufficient funds
are in the Authorized Account(s), Bank may debit another Account maintained by Customer. Bank will
give Customer notice of any ACH Entries credited to or debited from Customer’s Account by listing such
transactions on the Account Statement and through the information reporting services offered by Bank
from time to time, but Customer agrees that Bank will not be liable for any failure or delay in providing
Section 6. PROVISIONAL SETTLEMENT.
Customer is hereby notified that payment of an Entry by the RDFI to the Receiver is provisional until
receipt by the RDFI of final settlement; and Customer acknowledges and agrees that, if such settlement
is not received, the RDFI shall be entitled to a refund from the Receiver of the amount credited, and
Customer shall be considered not to have paid the Receiver the amount of the electronic funds transfer.
Bank’s payment of any debit Entry, returned Credit Entry, or credit Reversal is provisional until Bank
receives final settlement for the Entry or Reversal. If final settlement is not received, Bank is entitled to a
refund and may charge Customer’s Account for the amount previously credited. Bank may delay the
availability of any amount credited for a debit Entry or a credit Reversal if Bank believes there may be
insufficient funds in Customer’s Account to cover any chargeback or return of the Entry or Reversal.
Bank may require the personal guarantee of a principal or an owner of Customer.
Section 7. PRE-FUNDING.
Bank reserves the right to require Customer to pre-fund an Account maintained at Bank prior to the
Settlement Date of an ACH Credit Entry or File or before crediting the Receiver’s account in the case of
an On-Us Transfer (“Prefunding”), at any time and without prior notice. Bank shall determine whether
Pre-Funding is required based on criteria established from time to time by Bank with respect to
Customer’s use of the Service. When Bank requires Pre-Funding, Customer shall maintain sufficient
Available Funds in the Authorized Account(s) to settle for the Credit Entries at the time the Credit
Entries are originated by Customer and sent to Bank, and Bank shall not be obligated to process Entries
unless sufficient Available Funds are in the Authorized Account.
Section 8. RESERVES.
From time to time, Bank shall evaluate Customer’s Entry activity for the purpose of establishing
averages for Entry frequency, amount, returns and adjustments. These evaluations will occur at least
annually and may occur more frequently at Bank’s discretion. In connection with these evaluations,
Bank reserves the right to require Customer to establish reserves with Bank calculated by Bank to cover
Customer’s obligations to Bank arising from use of the Service. Reserves may be expressed as a fixed
dollar amount or as a “rolling reserve” calculated based on “rolling” averages determined by Bank’s
periodic evaluations. The amount of reserves required by Bank, if any, will be communicated directly to
Customer from time to time. Customer agrees to establish reserves as required by Bank within five (5)
Business Days after receipt of a communication from Bank setting forth the amount of required reserves
and the basis of calculation used to determine the amount of reserves. Bank may suspend the Service if
Customer fails to timely establish the required amount of reserves following communication of the
reserve requirement by Bank. Customer agrees that Bank is permitted to hold the reserve amount for a
reasonable period of time following termination of the Service.
Section 9. REJECTION OF ENTRIES.
Customer agrees that Bank has no obligation to accept Entries and therefore Bank may reject and refuse
to accept any Entry issued by Customer for any reason. Bank shall have no liability to Customer for
rejection of an Entry pursuant to the Agreement. Without limiting the foregoing, Bank may, in its sole
discretion, refuse to process and reject any Entries under this Service if, in Bank’s sole judgment:
(a) there is reasonable cause to believe that any Entry will be returned or will not settle in the ordinary
course of business for any reason, (b) to do otherwise would violate any limit set by the applicable
Clearing House Association or any governmental authority or agency to control payment system risk,
(c) a Credit Entry or the return of a Debit Entry would create an overdraft of Customer’s Accounts; or
(d) the Entry is not of a type established for origination by Customer. Customer can check the status of
an Entry using the information reporting services offered by Bank from time to time, and Customer
agrees that Bank has no obligation to separately notify Customer in the event Bank rejects an Entry and
acknowledges that it is Customer’s responsibility to monitor the processing or rejection of its Entries.
Customer may not reinitiate Entries except as prescribed by the Rules.
Section 10. CANCELLATION OR AMENDMENT BY CUSTOMER.
Customer shall have no right to cancel or amend any Entry after its receipt by Bank. However, Bank may,
at its option, accept a cancellation or amendment by Customer. If such a request is received by Bank
before the affected Entry has been transmitted to the ACH processor (or, in the case of an On-Us Entry,
before the Receiver’s account has been credited or debited), Bank may, at its option, use reasonable
efforts to cancel or amend the Entry as requested, but Bank shall have no liability if the cancellation or
amendment is not effected. If Bank accepts a cancellation or amendment of an Entry, Customer hereby
agrees to indemnify and hold Bank harmless from and against any and all Losses incurred by Bank as the
result of its acceptance of the cancellation or amendment.
Section 11. REVERSALS OF ENTRIES.
(a) General Procedure. Upon proper and timely request by Customer, Bank will use reasonable
efforts to effect a reversal of an Entry or File. To be “proper and timely,” the request must: (i) be made
within five (5) Business Days of the Effective Entry Date for the Entry or File to be reversed; (ii) be made
immediately, not to exceed ten (10) hours, upon discovery of the error; and (iii) be accompanied by an
ACH Adjustment Request Form and comply with all of the Rules. In addition, if Customer requests
reversal of a Debit Entry or Debit File, Customer shall concurrently deposit into Customer’s Account an
amount equal to that Entry or File. Customer shall notify the Receiver of any reversing Entry initiated to
correct any Entry it has initiated in error. The notification to the Receiver must include the reason for
the reversal and be made no later than the Settlement Date of the reversing Entry.
(a) No Liability; Reimbursement to Bank. Under no circumstances shall Bank be liable to
Customer for interest or related losses if the requested reversal of an Entry is not effected. Customer
shall reimburse Bank for any Losses that Bank incurs in effecting or attempting to effect Customer’s
request for reversal of an Entry.
Section 12. ERROR DETECTION.
Bank has no obligation to discover and shall not be liable to Customer for errors made in any Entry
submitted by or on behalf of Customer, including but not limited to errors made in identifying the
Receiver, or an Intermediary or RDFI or for errors in the amount of an Entry or for errors in Settlement
Dates. Bank shall likewise have no duty to discover and shall not be liable for duplicate Entries issued by
Customer. Bank and any receiving bank (including any beneficiary’s bank and any intermediary bank)
may rely on the account number or other identifying number of any bank, person, or bank account
specified in the Entry, even if such numbers identify a bank, person or bank account different from the
bank, person or bank account designated by name, and the Customer’s obligation to pay the amount of
the Payment Order to the Bank is not excused in those circumstances. In the event that Customer makes
an error or issues a duplicate Entry, Customer shall indemnify and hold Bank harmless from and against
any and all Losses incurred by Bank as result of the error or issuance of duplicate Entries.
Section 13. COMPLIANCE WITH RULES AND LAWS.
Customer acknowledges it has a copy or has access to a copy of the Rules. Customer agrees, represents
and warrants to Bank that all actions by Customer contemplated by the Agreement, including the
preparation, transmittal, and settlement of Entries and Payment Orders, shall comply with Applicable
Laws and the Rules, as each may be amended from time to time and as in effect whenever Customer
uses the Service. Customer agrees that the Bank shall be excused and not be required to perform the
Service to the extent that the action is inconsistent with Applicable Laws.
Section 14. PROHIBITED ENTRIES.
Customer agrees not to use or attempt to use the Service: (a) to engage in any illegal purpose or activity
or to violate any Applicable Laws, (b) to breach any contract or agreement by which Customer is bound,
(c) to engage in any internet or online gambling transaction, whether or not gambling is legal in any
applicable jurisdiction, or (d) to engage in any activity or submit any type of Entry that is restricted or
not specifically authorized and permitted by the Agreement, including, but not limited to, International
ACH Entries (IATs) or Entries that are restricted by type of Receiver. Customer acknowledges and agrees
that Bank has no obligation to monitor Customer’s use of the Service for Entries and activity that is
impermissible or prohibited under the terms of the Agreement; provided, however, that Bank reserves
the right to decline to execute any Entry or activity that Bank believes violates the terms of the
Section 15. PRE-NOTIFICATION.
Customer, at Customer’s option, may send pre-notification that Customer intends to initiate an Entry or
Entries to a particular Account within the time limits prescribed for such notice in the Rules. Such notice
shall be provided to Bank in the format and on the medium provided in the Rules. If Customer receives
notice that such pre-notification has been rejected by an RDFI within the prescribed period, or that an
RDFI will not receive Entries without having first received a copy of the Authorization Agreement signed
by Customer’s client, Customer will not initiate any corresponding Entries to such Accounts until the
cause for rejection has been corrected or until Customer has provided the RDFI with such Authorization
Agreement within the time limits provided by the Rules.
Section 16. RETURNED ENTRIES.
Bank shall notify Customer of the receipt of a returned Entry within the reporting timelines indicated in
the Operational Instructions, which may include notice by posting or transmission to any of the Channels
used with the Service; provided, that Bank shall have no liability for any delay in providing such notice or
for any allegation from Customer that such notice should have been provided at an earlier time.
Provided that Bank has complied with the terms of the Agreement, in connection with a returned Entry
or electronic funds transfer, Bank will have no liability to Customer based on the return thereof. Except
for an Entry retransmitted by Customer in accordance with the requirements provided herein, Bank shall
have no obligation to retransmit a returned Entry if Bank complied with the terms of the Agreement
with respect to the original Entry. Bank shall monitor Customer’s return activity and may request proof
of Authorization Agreement for any Entry. If Bank deems that Customer has excessive returns, Bank may
terminate Customer’s ability to submit Debit Entries immediately.
Section 17. NOTIFICATION OF CHANGE.
Bank shall provide Customer all information, as required by the Rules, with respect to each Notification
of Change (“NOC”) Entry or Corrected Notification of Change (“Corrected NOC”) Entry received by Bank
relating to Entries transmitted by Customer. Customer shall ensure that changes requested by the NOC
or Corrected NOC are made as required by the Rules following Customer’s receipt of the NOC
information from Bank or prior to initiating another Entry to the Receiver’s account, whichever is later. If
the NOC is incorrect, Customer will generate a refused Notification of Change and deliver it to Bank.
Section 18. CUSTOMER REPRESENTATIONS AND WARRANTIES.
With respect to each and every Entry transmitted by Customer, Customer represents and warrants to
Bank and agrees that: (a) each person or entity shown as the Receiver on an Entry received by Bank
from Customer has authorized the initiation of such Entry and the crediting or debiting of its account in
the amount and on the Effective Entry Date shown on such Entry, (b) such Authorization Agreement is
operative at the time of transmittal or crediting or debiting by Bank as provided herein, (c) Entries
transmitted to Bank by Customer (including any User or TPSP) are limited to those types of Entries
permitted by Bank, and are accurate and complete, (d) Customer shall perform its obligations under the
Agreement in accordance with all Applicable Laws, including, without limitation, maintenance of records
required by Applicable Laws, (e) Customer shall originate Payment Orders only for Customer’s Accounts
and not as agent or on behalf of any other third party (unless Customer has properly notified Bank it is a
Third-Party Sender, provided all required information and documentation and complied with the ACH
Third-Party Sender Service Terms), (f) Customer will notify Bank of Customer’s use of any TPSP or any
other Vendor for the Service, and Customer shall be responsible for the acts of such TPSP or Vendor as
the actions or omissions of Customer as set forth in the Agreement, and (g) any Entry or Payment Order
submitted to Bank by Customer or on behalf of Customer by a TPSP in accordance with these Service
Terms authorizes Bank to initiate an electronic funds transfer in accordance with the terms thereof.
Section 19. FINANCIAL INFORMATION AND AUDIT.
In addition to Bank’s other audit rights under the Agreement, Customer hereby authorizes Bank (and its
regulators and auditors), subject to Customer’s physical and logical security procedures, to enter
Customer’s business premises for the purpose of verifying that Customer is in compliance with the
Agreement and Customer specifically authorizes Bank to perform an audit of Customer’s operational
controls, information security controls to maintain the confidentiality of Confidential Information, risk
management practices, staffing and the need for training and ongoing support, and information
technology infrastructure. Customer hereby acknowledges and agrees that Bank shall have the right to
mandate specific internal controls at Customer’s location(s) and Customer shall comply with any such
mandate. Customer agrees that if requested by Bank, Customer will complete a self-assessment of
Customer’s operations, management, staff, systems, internal controls, training and risk management
practices that would otherwise be reviewed by Bank in an audit of Customer.