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What is a THIRD PARTY SERVICE PROVIDER ?

THIRD PARTY SERVICE PROVIDER – An originator, an ODFI, or an RDFI may use a third-party service provider during the process of originating or receiving ACH transactions. Third-party service providers can include data processors, correspondent banks, or financial institutions providing ACH services to other financial institutions.

Third Party Sender

is an organization that is not an Originator that authorized an ODFI or a Third-Party Service Provider to transmit, for its account or the account of another Third-Party Sender a credit entry, debit entry, or non-monetary entry to the Receiver’s account at the RDFI. An organization acting as a Third-Party Sender is also a Third-Party Service Provider. Third-Party Senders are a subset of Third-Party Service Providers. A Third-Party Sender is always a Third-Party Service Provider that acts on behalf of an Originator, but a Third-Party Service Provider does not always act as a Third-Party Sender. A Third-Party Service Provider is considered to be a Third-Party Sender when it acts as an intermediary between the ODFI and the Originator and there is no contractual agreement between the Originator and the ODFI. In this instance, the Third-Party Sender acts like the ODFI to the Originator. In any circumstance in which an Originator utilizes the services of a Third-Party Service Provider but has also executed a contractual agreement directly with the ODFI, The Third-Party Service Provider would not be considered a Third-Party Sender and would not be subject to the rule provisions governing Third-party Senders.

Responsibilities and Obligations of the Third Party Sender

The Rules do not relieve the ODFI of any of its obligations when they are performed by a Third-Party Sender.

Additional obligations of Third-Party Senders:

  • The NACHA Operating Rules obligate the Third-Party Sender to provide to the ODFI any information that the ODFI considers to be reasonably necessary to identify each Originator within two banking days of the request.
  • The Third-Party Sender warrants to the ODFI that the Originator has agreed to assume the responsibilities of an Originator, as required by the NACHA Operating Rules. In any case where the Originator fails to perform its obligations as an Originator under the Rules, the Third-Party Sender indemnifies the ODFI against any loss.
  • Third-Party Senders that perform any obligations of an ODFI under the NACHA Operating Rules must also comply with all ODFI requirements under the NACHA Operating Rules, and must warrant that it is legally able to do so. The NACHA Operating Rules do not relieve the ODFI of its obligations when they are performed by a Third-Party Sender.
  • Each Third-Party Sender is obligated to make payment to the ODFI for all credit and debit entries that are returned by the RDFI. In the event that the ODFI does not receive payment from the Third-Party Sender, the Originator of the entry agrees to pay the ODFI.
  • The Third-Party Sender and its Originators are responsible for the retention and delivery of any records, documentation and data related to copies of items, source documents or authorizations.

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