This glossary defines essential terminology used throughout Plaid Transfer operations, including payment rails, roles, statuses, and Plaid-specific features.
\nPayment Directions
\nDebit: A pull of funds from an external account into the Customer’s Ledger.
\nCredit: A push of funds from the Customer’s Ledger to an external account.
\nPayment Rails
\nACH (Automated Clearing House): Batch-processed electronic network for U.S. bank-to-bank payments.
\nStandard ACH: ACH transfer with a next business day settlement window. Plaid cutoff for next-day processing is 8:30 PM ET.
\nSame Day ACH: Accelerated ACH transfer that settles the same business day if submitted before 3:00 PM ET.
\nFedNow: Real-time payment rail from the Federal Reserve. Supports only credit transfers. Irreversible once sent.
\nRTP (Real Time Payments): Real-time 24/7 payment rail by The Clearing House. Credit-only and irreversible.
\nWire: High-speed, irreversible credit transfer between banks, typically completed within hours. Typically irrevocable.
\nACH Terms
\nNacha: Regulatory body that governs ACH rules and procedures.
\nODFI (Originating Depository Financial Institution): The bank that initiates an ACH transfer (Plaid’s banking partner) on behalf of the originator.
\nRDFI (Receiving Depository Financial Institution): The bank that receives the funds, typically the user’s bank.
\nOriginator: The business (e.g., a Plaid customer) requesting the transfer.
\nRecall: A request (via the ODFI) for the RDFI to return funds when a reversal is no longer possible, typically for amounts over $1,000. Common reasons include unauthorized debits or duplicate/misdirected credits. The RDFI is not required to comply.
\nReversal: A correction of an erroneous ACH entry, such as a duplicate, wrong amount, or misdirected payment. Must be submitted within 5 banking days of settlement and within 24 hours of discovering the error. Partial reversals are not allowed.
\nTrace Request: A request to locate an ACH transaction that hasn’t posted or was misapplied (e.g., wrong account). Used to determine the status and resolution of funds in the network.
\nWSUD (Written Statement of Unauthorized Debit): A consumer-signed form stating that an ACH debit was unauthorized (e.g., never authorized, wrong date/amount, initiated by an unauthorized party). RDFIs must collect the WSUD and provide it to the ODFI within 10 banking days if requested.
\nPayment Statuses
\nPending: Not yet submitted to the payment network. Cancelable.
\nPosted: Submitted but not yet settled.
\nSettled: Funds have moved between institutions.
\nFunds Available: Debit funds released and available.
\nCanceled: Stopped before money movement.
\nFailed: Rejected before settlement. For RTP and FedNow, this is the terminal status when the receiving bank (RDFI) rejects or times out on the instant payment. Accepted payments settle immediately and are final.
\nReturned: Rejected after submission. Applies to ACH debits/credits and wires when the receiving bank sends the funds back post-settlement.
\nTransfer Accounts & Tools
\nFBO Account (For Benefit Of Account): Custodial account Plaid uses to hold client funds.
\nFunding Account: Your bank account connected to the Plaid Ledger for funding transfers.
\nLedger (Plaid Ledger): The balance maintained with Plaid for transfer debits and credits.
\nSweep: Funds movement between your Ledger and funding account.
\nTransfer Interfaces & Features
\nTransfer Dashboard: UI to monitor and manage transfers.
\nRecurring Transfers: Scheduled, repeat fund movements.
\nRefunds: A return of funds to the payer, initiated by the customer. Refunds are connected to a debit transfer. To issue a refund unconnected to a debit transfer, a separate credit transfer can be utilized if approved for a credit use case.
\nTransfer Rules: Customer-defined thresholds for authorization and risk.
\nTransfer UI: Link-based interface for initiating transfers without using the API.
\nTransfer Risk Authorization Engine: Plaid’s system for evaluating transfer risk before money movement occurs. Every /transfer/authorization/create call runs through this engine. It checks fraud and compliance signals (like return rates, OFAC, device/IP risk, and balance availability) to decide whether a transfer is approved, declined, or rerouted. Customers can define custom rulesets and outcomes (e.g., ACCEPT, REVIEW, REROUTE) in the dashboard.