Glossary of Bank Products and Common Bank Terms

• Jurisdiction: United States

Glossary of Bank Products and Common Bank Terms

Account Party. A bank customer who requests that its bank issue a letter of credit naming a third party as the beneficiary.

ACH, or Automated Clearing House. The electronic network for financial transactions in the U.S. ACH processes large volumes of credit and debt transactions in batches using a customer's bank account and routing information. Common ACH transactions are direct deposit, payroll and consumer payments to insurers, taxing authorities and mortgage companies.

Parties to an ACH transaction:

Originator: the person or entity who initiates the transaction. The Originator can initiate a credit (i.e., the Originator "pushes" funds from its account to another account) or a debit (i.e., the Originator "pulls" funds from another account). Receiver: the person or entity whose account is either credited (when the Originator "pushes" funds into the Receiver's account) or debited (when the Originator "pulls" money out of the Receiver's account).
Originating Depository Financial Institution: the bank in which the Originator's account is located. Thus, the Originator is a customer of the Originating Depository Financial Institution. Receiving Depository Financial Institution: the bank in which the Receiver's account is located. The Receiver is a customer of the Receiving Depository Financial Institution.

ACH Operator: the central clearing facility that sorts through the millions of ACH requests and makes sure that the Originating Depository Financial Institution and Receiving Depository Financial Institution receive the correct amounts of credits and debits. There are currently two ACH Operators: the Federal Reserve and the Clearing House.

AMLs, or Anti-Money Laundering Laws. Require banks to, among other things, verify a customer's identity and determine whether the customer is on any list of suspected terrorists provided by the federal government. Related regulations may require a bank to verify the source of funds for a sale or other strategic transaction, or the identity of the person conducting the transaction.

Automatic Payment Services. A bank service that enables a bank's customer to make money transfers on a regular basis. These services are also sometimes referred to as "standing transfer orders" " banker's orders" or "standing instructions."

Autopay Account. A service that permits regular payments to be automatically deducted from an account on a periodic basis.

Availability Float. The gap of time...