Prior to processing an entry, what is essential regarding the authorization?

Prior to processing an entry, what is essential regarding the authorization?

• A. It must be signed
• B. It must be notarized
• C. It must be archived
• D. It must be verbally confirmed

Answer: (A)

The essential requirement regarding authorization before processing an ACH entry is that it must be signed. This means that the originator of the ACH transaction must provide a clear and explicit consent, typically in the form of a signature on a written authorization form. This signed document serves to confirm that the account holder agrees to the transaction and understands the terms associated with it. The importance of a signed authorization lies in its role as legal proof of the agreement between the parties involved. It is a safeguard that helps protect both the originator and the receiving financial institution from unauthorized transactions, thereby promoting trust and integrity in the ACH process. In contrast, notarization is not a standard requirement for ACH transactions, and while archiving authorization forms is a good practice, it does not prevent fraud nor confirm consent as effectively as a signature. Additionally, verbal confirmation may not provide adequate documentation or proof of authorization for processing, which is why a signed authorization is the critical piece of evidence needed before proceeding with the transaction.

The essential requirement regarding authorization before processing an ACH entry is that it must be signed. This means that the originator of the ACH transaction must provide a clear and explicit consent, typically in the form of a signature on a written authorization form. This signed document serves to confirm that the account holder agrees to the transaction and understands the terms associated with it.

The importance of a signed authorization lies in its role as legal proof of the agreement between the parties involved. It is a safeguard that helps protect both the originator and the receiving financial institution from unauthorized transactions, thereby promoting trust and integrity in the ACH process.

In contrast, notarization is not a standard requirement for ACH transactions, and while archiving authorization forms is a good practice, it does not prevent fraud nor confirm consent as effectively as a signature. Additionally, verbal confirmation may not provide adequate documentation or proof of authorization for processing, which is why a signed authorization is the critical piece of evidence needed before proceeding with the transaction.