What type of entity is a Receiver in an ACH transaction?

In an ACH transaction, the Receiver is defined as the individual or entity that is authorized to receive the payment. This designation highlights the critical role that the Receiver plays in the transaction process, as they are the intended recipient of the funds that are being transferred through the Automated Clearing House network.

The Receiver is identified by their account details during the transaction and must have provided authorization to the Originator (the entity initiating the payment) to process the transaction. This explicit authorization ensures that the Receiver is aware of and consents to the transaction, which is a fundamental part of the ACH system's requirements to protect consumers and businesses.

Understanding the function of the Receiver helps clarify the roles of other entities in the ACH framework, such as the Originator, who initiates the payment, and the ODFI, which facilitates the transfer but does not define the Receiver's role. The emphasis on the Receiver’s authorization is crucial in maintaining the integrity and security of electronic payments.