[guan]

In the case of a debit, say, is the account receiving the money always the ODFI? Can you do an ACH transfer from one client’s account at bank A to another client’s account at bank B, with you using a third financial institution to process this?

[edawerd]

the ODFI is always the bank that is initiating the ACH transaction, whether its a credit or debit. The RDFI is always the bank that is the target of the ACH transcation, whether its a credit or debit.

You cannot do an ACH transfer from one clients account to another clients account. You must be the originator of the ACH transaction (meaning your bank account must be at one end of the transaction).

At ZenPayroll, this is why we'll first initiate an ACH debit from the company's account to our account, wait 3 business days, and then initiate an ACH credit from our account to the employee's account.

[disillusioned]

This is really interesting... I currently use and administer our Intuit Online Payroll account. I'm required to run payroll only 2 full business days before pay day. Does the final credit stage you mention here not introduce any additional delay? (Read: is IOP doing the same thing to their main account?)

Also, are you or IOP able to collect interest on the 3 day float? Or does interest not accrue for not fully guaranteed funds?

Finally, is the clearinghouse account you utilize internally not something of a high-risk target? I understand there are safeguards in place to prevent unauthorized false requests, but the thought of even temporarily acting as a go between with somebody else's funds like that feels an awful lot like being a bank without the rewards.

[guan]

I also wonder if the account is legally set up so that employer customers get FDIC pass-through insurance.