What does a Receiving Depository Financial Institution (RDFI) do?

The function of a Receiving Depository Financial Institution (RDFI) is to receive Automated Clearing House (ACH) entries and ensure that these entries are accurately posted to the depositors’ accounts. This role is essential within the ACH network, as the RDFI acts as the intermediary that processes incoming ACH transactions, whether they are deposits or withdrawals, and applies them to the appropriate accounts held by its customers.

In the context of the ACH network, the RDFI takes the transactions that have been initiated by an Originating Depository Financial Institution (ODFI) and ensures they are delivered to the correct account holders. This process includes various checks to ensure accuracy and compliance with banking regulations, providing a critical role in the broader payment system.