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Question 1The ACH Network and Payments Industry

Which party to an ACH transaction originates entries into the ACH Network on behalf of an Originator?

  1. The ACH Operator
  2. The Receiver
  3. The Originating Depository Financial Institution (ODFI) Correct answer.
  4. The Receiving Depository Financial Institution (RDFI)

Explanation

The ODFI receives entries from the Originator and transmits them to an ACH Operator for clearing and settlement. The RDFI is the institution that receives the entry and posts it to the Receiver's account.

Question 2The ACH Network and Payments Industry

Which two organizations serve as ACH Operators?

  1. Nacha and the Consumer Financial Protection Bureau
  2. FedACH and the Electronic Payments Network (EPN) Correct answer.
  3. Fedwire and CHIPS
  4. The Federal Reserve Banks and the Consumer Financial Protection Bureau

Explanation

The two ACH Operators are FedACH, operated by the Federal Reserve Banks, and the Electronic Payments Network, operated by The Clearing House. They provide clearing and settlement for ACH entries.

Question 3The ACH Network and Payments Industry

A company wants to pay its employees by direct deposit. Which SEC code is most appropriate for these consumer credit entries?

  1. WEB
  2. CCD
  3. CTX
  4. PPD Correct answer.

Explanation

PPD is used for prearranged consumer payments and deposits, including payroll direct deposit. CCD and CTX are corporate codes, and WEB is used for internet-initiated entries.

Question 4The ACH Network and Payments Industry

Which statement best describes how ACH entries are settled?

  1. Settlement occurs only between the Originator and the Receiver.
  2. Entries are settled only at the end of each calendar year.
  3. Entries are processed in batches and settled on a net basis by the ACH Operator. Correct answer.
  4. Each entry is settled individually in real time as it is processed.

Explanation

The ACH Network is a batch, store-and-forward system. The ACH Operator calculates net settlement positions for participating financial institutions and settles those positions.

Question 5The ACH Network and Payments Industry

Which body publishes the Operating Rules that govern the ACH Network?

  1. The Securities and Exchange Commission
  2. The Federal Reserve Board of Governors
  3. Nacha Correct answer.
  4. The Clearing House

Explanation

Nacha, formerly known as NACHA, owns and publishes the Nacha Operating Rules that govern ACH participants. The Federal Reserve and The Clearing House operate ACH processing systems but do not write the rules.

Question 6The ACH Network and Payments Industry

An ACH debit is returned with return code R01. What does R01 indicate?

  1. The account has been closed
  2. The debit was not authorized by the consumer
  3. There are insufficient funds in the account Correct answer.
  4. The account number is invalid

Explanation

R01 means the account has insufficient funds to cover the entry. Account closed is R02, unauthorized consumer debit codes include R05 and R10, and an invalid account number is R04.

Question 7The ACH Network and Payments Industry

What is the purpose of a prenotification (prenote) entry in the ACH Network?

  1. To validate account information with a zero-dollar entry before live entries begin Correct answer.
  2. To transfer a small dollar amount to open a new account
  3. To return an entry to the ODFI because of insufficient funds
  4. To notify an RDFI that a stop payment has been placed

Explanation

A prenote is a zero-dollar entry sent before the first live entry to verify that the account number and routing information are valid. The RDFI may respond with a Notification of Change or a return.

Question 8The ACH Network and Payments Industry

Which federal regulation establishes consumer protections and error-resolution procedures for electronic fund transfers, including consumer ACH debits?

  1. Regulation J
  2. UCC Article 4A
  3. Regulation E Correct answer.
  4. Regulation CC

Explanation

Regulation E implements the Electronic Fund Transfer Act and governs consumer rights and error resolution for electronic transfers. Regulation CC addresses check availability, Regulation J covers Fedwire and check collection, and UCC Article 4A governs wholesale wire transfers.

Question 9The ACH Network and Payments Industry

After receiving a Notification of Change (NOC) from the RDFI, within what period must the Originator make the requested change?

  1. Six banking days Correct answer.
  2. Five banking days
  3. Two banking days
  4. Fifteen calendar days

Explanation

The Originator must make the change within six banking days of receiving the NOC. The ODFI must transmit the NOC to the Originator within two banking days of receipt; otherwise the Originator is deemed to have received it after two banking days.

Question 10The ACH Network and Payments Industry

Within what period may an RDFI return a consumer's unauthorized ACH debit entry?

  1. Two banking days from the settlement date
  2. 60 calendar days from the settlement date Correct answer.
  3. Fourteen calendar days from the settlement date
  4. Five banking days from the settlement date

Explanation

Consumer debit entries may be returned as unauthorized within 60 calendar days from the settlement date. Corporate debit entries generally must be returned within two banking days.

Question 11The ACH Network and Payments Industry

An RDFI determines that a corporate ACH debit (CCD) was not authorized. Within what period must the return generally be transmitted?

  1. 60 calendar days from settlement
  2. Ten banking days from settlement
  3. Two banking days from settlement Correct answer.
  4. Five banking days from settlement

Explanation

Corporate debit entries, such as CCD and CTX, generally must be returned within two banking days of settlement. The longer 60-calendar-day window applies to consumer debit entries.

Question 12The ACH Network and Payments Industry

What authorization standard applies to a consumer debit entry initiated by telephone (TEL)?

  1. An oral authorization that is either recorded or confirmed in writing Correct answer.
  2. No authorization is required if the call is recorded
  3. A signed written authorization only
  4. An email confirmation sent after the call

Explanation

For TEL entries, the Originator must obtain the consumer's oral authorization and either record the call or provide written confirmation. The authorization must identify the account, the amount, and the timing of the debit.

Question 13The ACH Network and Payments Industry

Under Nacha's WEB debit account validation rule, what must an Originator do before the first WEB debit to a consumer's account?

  1. Receive a written statement from the RDFI confirming the account
  2. Validate the account with a commercially reasonable fraud-detection method or micro-entry validation Correct answer.
  3. Send a prenote at least 30 calendar days in advance
  4. Obtain a notarized authorization from the consumer

Explanation

The first use of a consumer account for a WEB debit must be validated using a commercially reasonable fraudulent transaction detection system or micro-entry validation. This requirement is intended to reduce fraud and unauthorized returns.

Question 14The ACH Network and Payments Industry

Which entity acts as an intermediary between an Originator and an ODFI, transmitting entries on the Originator's behalf without itself being the Originator?

  1. The Receiver
  2. The ACH Operator
  3. A Third-Party Sender Correct answer.
  4. The RDFI

Explanation

A Third-Party Sender is an intermediary that transmits entries on behalf of an Originator but is not itself the Originator. Third-Party Senders must register with Nacha, and the ODFI remains responsible for the entries.

Question 15The ACH Network and Payments Industry

Which party processes an International ACH Transaction (IAT) entry at the point where it enters or leaves the United States?

  1. The Receiver's financial institution
  2. The Federal Reserve Board
  3. A Gateway Operator Correct answer.
  4. The ODFI

Explanation

IAT entries are processed by a Gateway Operator, which is an ACH Operator acting as a gateway for international entries. IAT entries must include addenda information used for OFAC screening.

Question 16The ACH Network and Payments Industry

In 2022, Nacha raised the per-transaction dollar limit for Same-Day ACH entries from $25,000 to what amount?

  1. $50,000
  2. $75,000
  3. $250,000
  4. $100,000 Correct answer.

Explanation

Effective in March 2022, the Same-Day ACH per-transaction limit increased from $25,000 to $100,000. Same-Day ACH supports both credit and debit entries processed within same-day windows.

Question 17The ACH Network and Payments Industry

A consumer wants to stop payment on a recurring ACH debit. To ensure the RDFI can comply, the stop-payment order must generally be received at least how long before the debit is scheduled to settle?

  1. Fourteen calendar days
  2. Three banking days Correct answer.
  3. Ten calendar days
  4. One banking day

Explanation

Nacha requires a consumer stop-payment order to be received by the RDFI at least three banking days before the entry is scheduled to settle. An oral order must be confirmed in writing within 14 days.

Question 18The ACH Network and Payments Industry

An Originator's consumer debit is returned R01 (insufficient funds). If the Originator wants to reinitiate the entry, what is the minimum wait before the reinitiated entry may be sent?

  1. Two banking days after the return
  2. Thirty calendar days after the return
  3. Fifteen calendar days after the return
  4. Six banking days after the return Correct answer.

Explanation

For an entry returned for insufficient funds or uncollected funds, reinitiation may not occur until six banking days after the return. Reinitiation is also limited in number and must contain the same basic information as the original entry.

Question 19The ACH Network and Payments Industry

ACH files are composed of 94-character records. Into what size blocks must the records be grouped?

  1. Five records
  2. Twenty records
  3. Fifty records
  4. Ten records Correct answer.

Explanation

ACH records are grouped into blocks of ten records, producing a 940-character block. Any unused space in the final block is filled with padding records containing the digit 9.

Question 20The ACH Network and Payments Industry

Which payment system is a real-time gross settlement (RTGS) system operated by the Federal Reserve for large-value interbank transfers?

  1. The RTP network
  2. The Fedwire Funds Service Correct answer.
  3. FedACH
  4. The Electronic Payments Network (EPN)

Explanation

The Fedwire Funds Service is the Federal Reserve's real-time gross settlement system for large-value payments. FedACH and EPN are batch ACH systems, and RTP is a private instant payment network.

Question 21The ACH Network and Payments Industry

An ODFI receives a return entry it believes is improper. Within what period may the ODFI transmit a dishonored return to the RDFI?

  1. Ten banking days after receiving the return
  2. Two banking days after receiving the return
  3. 60 calendar days after receiving the return
  4. Five banking days after receiving the return Correct answer.

Explanation

An ODFI may dishonor a return entry within five banking days of receiving it. The RDFI may then contest the dishonored return within two banking days of receipt.

Question 22The ACH Network and Payments Industry

Under Regulation E, if a financial institution cannot complete an investigation of a consumer's asserted EFT error within 10 business days, what must it generally do?

  1. Provisionally credit the consumer's account within 10 business days Correct answer.
  2. Refer the matter to the ACH Operator for resolution
  3. Close the account and return all funds
  4. Wait 45 business days before taking any action

Explanation

Regulation E requires the institution to provisionally credit the consumer's account if it cannot complete its investigation within 10 business days. The investigation may then be extended, generally up to 45 days after the claim, with the provisional credit in place.

Question 23The ACH Network and Payments Industry

Nacha's risk-management rules require an ODFI to monitor Originators against a threshold for unauthorized returns. What is that threshold?

  1. 3 percent
  2. 15 percent
  3. 0.05 percent
  4. 0.5 percent Correct answer.

Explanation

The unauthorized return rate threshold is 0.5 percent. The overall return rate threshold is 15 percent, and ODFIs must investigate Originators that exceed applicable thresholds.

Question 24The ACH Network and Payments Industry

A Same-Day ACH debit is settled in a same-day processing window. By what point must the RDFI transmit a return if the return is to be handled as a same-day return?

  1. By the end of the same calendar day
  2. Within 60 calendar days of settlement
  3. Within two banking days of settlement
  4. By the ACH Operator's same-day return deadline for that window Correct answer.

Explanation

Returns of same-day entries must be transmitted by the ACH Operator's same-day return deadline associated with the processing window. If that deadline is missed, the entry is handled under the standard return timeframes.

Question 25The ACH Network and Payments Industry

Which statement best describes the warranty an ODFI gives when it transmits an ACH entry to the ACH Operator?

  1. The Originator is a member of Nacha.
  2. The entry is authorized by the Originator and, where required, by the Receiver. Correct answer.
  3. The Receiver has sufficient funds to cover the entry.
  4. The RDFI will post the entry before settlement occurs.

Explanation

The ODFI warrants that each entry is authorized and complies with the Operating Rules, including authorization by the Receiver where required. The ODFI does not warrant the Receiver's account balance.

Question 26ACH Rules, Regulations, and Compliance

Which organization publishes and maintains the rulebook that governs the ACH Network?

  1. The Consumer Financial Protection Bureau
  2. Nacha Correct answer.
  3. The Office of the Comptroller of the Currency
  4. The Federal Reserve Board

Explanation

The Nacha Operating Rules are the private-sector rulebook for the ACH Network, published and maintained by Nacha, the association that also handles rulemaking, enforcement, and operator registration. Federal agencies regulate depository institutions under statutes such as Regulation E, but they do not issue the ACH operating rules themselves.

Question 27ACH Rules, Regulations, and Compliance

Which two organizations act as ACH Operators that process and settle ACH files?

  1. SWIFT and DTCC
  2. Visa and Mastercard
  3. CHIPS and Fedwire
  4. FedACH and EPN Correct answer.

Explanation

The ACH Network has two operators: FedACH, run by the Federal Reserve Banks, and the Electronic Payments Network (EPN), run by The Clearing House. They receive files from ODFIs, edit and sort entries, distribute them to RDFIs, and handle settlement.

Question 28ACH Rules, Regulations, and Compliance

An Originator chooses to send a prenotification for a new consumer authorization. When must the prenotification be transmitted?

  1. At least one banking day before the first live entry
  2. At least three calendar days before the first live entry
  3. At least ten banking days before the first live entry
  4. At least three banking days before the first live entry Correct answer.

Explanation

A prenotification is a zero-dollar entry used to validate account and routing information. If an Originator uses one, the Rules require transmission at least three banking days before the first live entry so the RDFI has time to return it or issue a Notification of Change.

Question 29ACH Rules, Regulations, and Compliance

For an ACH debit to a consumer account, the Rules require the consumer's authorization to be:

  1. Confirmed by the consumer's bank in advance
  2. Recorded on the Originator's voicemail system
  3. Mailed to the consumer's bank before the first entry
  4. Written, signed, or similarly authenticated Correct answer.

Explanation

Consumer debit authorizations must be in writing and signed or similarly authenticated, and the Originator must provide a copy to the consumer. The telephone exception (TEL) does not eliminate the need for either a recorded call or written notice confirming the terms.

Question 30ACH Rules, Regulations, and Compliance

Under the Rules, how long must an ACH participant retain records relating to entries?

  1. Three years
  2. Six years Correct answer.
  3. Two years
  4. Seven years

Explanation

The Rules require ACH participants to retain records of entries, including authorizations and related documentation, for six years from the date of the entry. This period supports audit, return, and dispute investigations.

Question 31ACH Rules, Regulations, and Compliance

Which body of law primarily governs error resolution and liability for unauthorized ACH debits to a consumer account?

  1. Regulation E Correct answer.
  2. UCC Article 4A
  3. Regulation CC
  4. UCC Article 3

Explanation

Regulation E implements the Electronic Fund Transfer Act and sets the error resolution, provisional credit, and consumer liability rules for electronic transfers from consumer accounts, including ACH debits. Article 4A of the UCC governs commercial funds transfers instead.

Question 32ACH Rules, Regulations, and Compliance

Which Standard Entry Class code is used for ACH entries moving funds between business accounts when no addenda remittance data is transmitted?

  1. PPD
  2. WEB
  3. CCD Correct answer.
  4. TEL

Explanation

CCD (Corporate Credit or Debit) is the entry class for business-to-business payments that do not carry ANSI X12 remittance information; when such remittance data travels with the entry, CTX is used. WEB, TEL, and PPD are consumer entry classes.

Question 33ACH Rules, Regulations, and Compliance

An RDFI returns a consumer debit because the receiver's account balance is below the amount of the entry. Which return reason code applies?

  1. R08
  2. R01 Correct answer.
  3. R03
  4. R02

Explanation

R01 is the code for insufficient funds, meaning the available balance in the receiver's account was less than the amount of the entry. R02 is account closed, R03 is no account or unable to locate, and R08 is payment stopped.

Question 34ACH Rules, Regulations, and Compliance

A debit entry settles on Monday, a banking day. Absent a longer period allowed by the applicable return reason code, when must the RDFI have transmitted its return?

  1. By the end of Tuesday
  2. By the end of Thursday of that same week
  3. By the end of Wednesday Correct answer.
  4. By the end of the next banking day

Explanation

For most return reason codes the RDFI must transmit the return by the end of the second banking day following the settlement date. Two banking days after a Monday settlement is Wednesday; certain codes, such as unauthorized consumer debits, allow much longer periods.

Question 35ACH Rules, Regulations, and Compliance

After an Originator receives a Notification of Change, within what period must it make the recommended correction?

  1. Ten banking days
  2. Six banking days Correct answer.
  3. Thirty calendar days
  4. Two banking days

Explanation

The Originator must make the change within six banking days of receiving the Notification of Change. If it cannot make the correction, it must stop originating entries to that receiver's account, and the RDFI must have transmitted the Notification of Change within two banking days of settlement.

Question 36ACH Rules, Regulations, and Compliance

A consumer has authorized fixed-amount recurring debits. The Originator intends to increase the debit amount. How much advance notice must the consumer receive?

  1. Ten calendar days Correct answer.
  2. Three calendar days
  3. Seven calendar days
  4. Fourteen calendar days

Explanation

When a recurring consumer debit amount will change, the Originator must send the receiver written notice at least ten calendar days before the effective date of the first entry in the new amount. The notice period gives the consumer time to object or revoke the authorization.

Question 37ACH Rules, Regulations, and Compliance

An Originator obtains consumer debit authorizations through its website. Under the WEB rules, how must the Originator verify the consumer's identity?

  1. Confirmed by telephone callback
  2. Performed by the ACH Operator
  3. Commercially reasonable Correct answer.
  4. Documented with a signed paper form

Explanation

For internet-initiated consumer debits, the authorization must be in writing and signed or similarly authenticated, and the Originator must use a commercially reasonable method to authenticate the consumer's identity. This may include shared secrets, digital certificates, or similar controls that provide reasonable assurance of identity.

Question 38ACH Rules, Regulations, and Compliance

Which statement about a TEL entry is correct?

  1. TEL entries may only be single-entry debits Correct answer.
  2. TEL entries may be recurring if the call is recorded
  3. TEL entries may be used for business accounts
  4. TEL entries require the consumer's written signature

Explanation

TEL is limited to a single consumer debit authorized orally by telephone; recurring debits authorized by phone must instead be originated under an entry class that supports written authorization, such as PPD or WEB. The Originator must either record the call or provide the consumer a written notice confirming the terms.

Question 39ACH Rules, Regulations, and Compliance

What is the maximum dollar amount of a single Same Day ACH entry?

  1. $1,000,000 Correct answer.
  2. $25,000
  3. $500,000
  4. $100,000

Explanation

Nacha raised the Same Day ACH per-transaction limit to $1,000,000, effective March 18, 2022, replacing the prior $100,000 cap. The higher limit lets institutions use same-day settlement for larger time-sensitive payments.

Question 40ACH Rules, Regulations, and Compliance

A consumer places a stop payment order on recurring ACH debits drawn from her account. Under Regulation E, how long does that order remain effective unless renewed?

  1. Fourteen days
  2. One year
  3. Two banking days
  4. Six months Correct answer.

Explanation

Regulation E provides that a consumer's stop payment order on preauthorized electronic transfers remains in effect for six months unless the consumer renews it, orally or in writing. The financial institution may confirm a written renewal requirement but cannot shorten the period.

Question 41ACH Rules, Regulations, and Compliance

How often must an ODFI conduct an ACH rules compliance audit of its ACH operations?

  1. Every two years
  2. Annually Correct answer.
  3. Every quarter
  4. Only when requested by the ACH Operator

Explanation

The Rules require the ODFI to conduct, or have conducted, an annual ACH rules compliance audit covering its own ACH operations and the activity of its Originators and Third-Party Senders. RDFIs and Third-Party Senders are subject to annual audit obligations as well.

Question 42ACH Rules, Regulations, and Compliance

Before an ODFI transmits entries for a new Originator, the Rules require the ODFI to:

  1. File the Originator's authorization forms with Nacha
  2. Obtain approval from the RDFI
  3. Publish the Originator's exposure limit in the Federal Register
  4. Enter into a written agreement with the Originator Correct answer.

Explanation

The ODFI must have a written origination agreement with each Originator before transmitting entries, and it must also establish exposure limits and perform an appropriate credit and risk assessment. The agreement allocates responsibilities for authorizations, returns, and Rules compliance.

Question 43ACH Rules, Regulations, and Compliance

An Originator validates a consumer's account by sending a small credit followed by a matching debit. Under the micro-entry rules, the Company Entry Description must be:

  1. VALIDATE
  2. ACCTCHECK
  3. ACCTVERIFY Correct answer.
  4. MICROENTRY

Explanation

Micro-entries used for account validation must be less than $1.00 and must carry the Company Entry Description ACCTVERIFY so that receiving institutions and consumers can identify their purpose. The rules also impose fraud monitoring obligations on Originators and ODFIs that use them.

Question 44ACH Rules, Regulations, and Compliance

A consumer telephones the Originator and states that she revokes her ACH debit authorization. What must the Originator do?

  1. Honor the revocation and stop originating entries Correct answer.
  2. Wait 30 days before acting on the request
  3. Require the consumer to submit the revocation in writing
  4. Continue debits until the RDFI sends a Notification of Change

Explanation

A receiver may revoke an authorization by notifying the Originator, and the revocation need not be in writing. Once notified, the Originator must not initiate any further entries under that authorization.

Question 45ACH Rules, Regulations, and Compliance

The date on which an Originator intends an entry to be posted to the receiver's account is called the:

  1. Effective date Correct answer.
  2. Processing date
  3. Transmission date
  4. Settlement date

Explanation

The effective date is the date the Originator intends the entry to settle and be posted to the receiver's account. Settlement date, by contrast, is the date the ACH Operator actually settles the entry among the participating institutions.

Question 46ACH Rules, Regulations, and Compliance

An entity aggregates entries for several Originators and acts as the intermediary between those Originators and an ODFI. Under the Rules, that entity is a:

  1. A financial institution that receives entries for consumers
  2. An Originator that sends entries to its own employees
  3. An intermediary between an Originator and an ODFI Correct answer.
  4. The Federal Reserve Bank that processes the ACH file

Explanation

That description matches a Third-Party Sender, which transmits entries on behalf of another Originator but is not itself the ODFI. Third-Party Senders must conduct an annual rules compliance audit, monitor Originators, and comply with the same origination obligations as the parties they serve.

Question 47ACH Rules, Regulations, and Compliance

What distinguishes an IAT entry from a domestic corporate entry?

  1. It carries foreign payment and gateway data Correct answer.
  2. It always requires the receiver's written consent
  3. It cannot be returned after settlement occurs
  4. It must be settled through Fedwire

Explanation

IAT entries carry additional data elements describing the foreign portion of the payment and identifying the gateway involved, such as the Gateway Operator's routing number and foreign payment information. This supports screening obligations, including OFAC compliance, that do not apply to purely domestic entries.

Question 48ACH Rules, Regulations, and Compliance

Which item may be collected as a re-presented check (RCK) entry?

  1. A $3,000 check drawn on a consumer account
  2. A $1,200 consumer check returned for insufficient funds Correct answer.
  3. A $900 third-party check that was never deposited
  4. A $5,000 corporate check returned for insufficient funds

Explanation

An RCK entry re-presents a consumer check of $2,500 or less that was returned for insufficient or uncollected funds, subject to limits on the number of re-presentments and the time since the original return. Checks that were never deposited, and checks above the dollar ceiling, do not qualify.

Question 49ACH Rules, Regulations, and Compliance

An ODFI transmits a debit entry to an RDFI. Under the Rules, the ODFI warrants to the RDFI that:

  1. The entry will not be returned by the RDFI
  2. The receiver's account holds sufficient funds
  3. The entry is authorized under the rules Correct answer.
  4. The RDFI has validated the account number

Explanation

The ODFI gives warranties to the ACH Operator and to each RDFI, including that the entry is authorized in accordance with the Rules and that the Originator has complied with its obligations. Those warranties underpin the return and loss-allocation framework.

Question 50ACH Rules, Regulations, and Compliance

Which statement about Same Day ACH is correct?

  1. Same Day entries settle on the following banking day
  2. Only credit entries can move as Same Day
  3. The ODFI must designate the entry as Same Day Correct answer.
  4. Same Day entries are exempt from the return rules

Explanation

It is the ODFI's responsibility to identify which entries are being submitted for same-day settlement, and RDFIs then must make those funds available within the prescribed window. Same Day ACH supports both credit and debit entries and remains subject to the normal return framework.