SEC stands for Standard Entry Class Code, which is a three-letter code used to identify the NACHA payment type (standard entry class) for ACH (Automated Clearing House) transactions. The SEC code describes how a payment was authorized by the consumer or business receiving an ACH transaction. SEC codes are defined and maintained by NACHA, the governing body for the ACH network.
Different SEC codes are used for different types of transactions. For example, PPD (Prearranged Payment and Deposit Entry) is used for recurring ACH debits, while CCD (Cash Concentration or Disbursement) is used for ACH debits and credits between businesses. Other SEC codes include TEL (Telephone-Initiated Entries) for debits authorized over the phone, and WEB (Internet-Initiated Entry) for debit entries authorized online.
It is mandatory for all ACH payments to include a SEC code, and both ACH credits and ACH debits must have a SEC code. Since SEC codes tend to be specific to a particular use case, most companies will only use a few different SEC codes in their payments.
