Aeropay knowledge hub – Pay by bank & ACH glossary

Welcome to the Aeropay Knowledge Hub, your comprehensive resource for modern bank-based payments. This glossary explains what each term is, how it works, and how Aeropay uses it to enable secure, fast, and reliable bank-to-bank money movement.

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ACH + Bank Transfers

ACH (Automated Clearing House)

• Definition: ACH is a network that moves money directly between bank accounts.
  
• How it works: It’s widely used for recurring and one-time payments.
  
• How Aeropay uses it: Aeropay leverages ACH to enable secure, reliable pay by bank and A2A transactions.
  
  • Learn more in Aeropay’s ACH Payments Guide.

ACH Debit

• Definition: An ACH debit pulls funds from a customer’s bank account with permission.
  
• How it works: Allows businesses to collect payments directly from customers.
  
• How Aeropay uses it: Aeropay ensures ACH debits are authorized and processed efficiently.
  
  • Explore Aeropay’s full ACH Debit vs. ACH Credit breakdown.
    
    

ACH Credit

• Definition: An ACH credit pushes funds from a customer’s bank account to a business account.
  
• How it works: Transfers funds directly to business accounts.
  
• How Aeropay uses it: Aeropay facilitates ACH credits for fast, reliable settlements.
  
  • Read Aeropay’s explanation of how ACH Credits work.

Same-Day ACH

• Definition: ACH payments that settle on the same business day.
  
• How it works: Enables faster receipt of funds.
  
• How Aeropay uses it: Aeropay supports same-day ACH to accelerate cash flow.
  
  

ACH Return

• Definition: Occurs when an ACH payment fails to settle due to insufficient funds or errors.
  
• How it works: Returned payments can require correction or resubmission.
  
• How Aeropay uses it: Aeropay reduces return risk using account verification, risk scoring, and real-time monitoring.
  
  • See Aeropay’s guide to ACH returns and preventing failed payments.
    
    

ACH Return Code

• Definition: A standard code explaining why an ACH payment returned.
  
• How it works: Helps businesses identify and correct issues.
  
• How Aeropay uses it: Aeropay interprets return codes to optimize future payments.
  
  

ACH Settlement

• Definition: The moment funds officially transfer between bank accounts.
  
• How it works: Confirms completion of a transaction.
  
• How Aeropay uses it: Aeropay tracks settlements for accurate reconciliation and timely confirmation.
  
  

ACH Authorization

• Definition: Customer consent to initiate an ACH debit or credit.
  
• How it works: Ensures transactions are permitted.
  
• How Aeropay uses it: Aeropay verifies and records authorization to maintain compliance.
  
  

Pay by Bank & Open Banking

Pay by bank

• Definition: Consumers pay directly from bank accounts without using cards.
  
• How it works: Funds are transferred from a customer account to a business account.
  
• How Aeropay uses it: Aeropay enables fast, secure, low-cost pay by bank transactions.
  
  • How pay by bank enables smarter, faster payments in the US‍
  • See also: Account-to-Account Payments

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Account-to-Account (A2A) Payments

• Definition: Direct transfers between bank accounts.
  
• How it works: Moves funds instantly and often with lower fees than cards.
  
• How Aeropay uses it: Aeropay leverages ACH and open banking rails for instant, low-fee payments.
  
  • Account-to-account (A2A) payments | The 2025 guide for businesses
  • Why Account-to-Account (A2A) Payments are a Viable Credit Card Alternative

Bank Account Linking

• Definition: Connects a customer’s bank account to a business for payment purposes.
  
• How it works: Enables recurring or one-time pay by bank payments.
  
• How Aeropay uses it: Aeropay securely links accounts while minimizing risk.
  
  • Learn more about bank account linking
    
    

Instant Bank Verification

• Definition: Confirms ownership and balance of a bank account in real-time.
  
• How it works: Reduces failed payments and fraud risk.
  
• How Aeropay uses it: Aeropay verifies accounts instantly for smoother transactions.
  
  

Bank-to-Bank Transfer

• Definition: Moving funds directly between two banks.
  
• How it works: Can be used for one-time or recurring payments.
  
• How Aeropay uses it: Aeropay ensures reliability and accurate reconciliation.
  
  

Open Banking

• Definition: Secure access to bank account data with customer consent.
  
• How it works: Allows third-party applications to initiate payments and access account info.
  
• How Aeropay uses it: Aeropay leverages open banking APIs for faster, safer payments.
  
  • Learn more in Aeropay’s Open Banking Guide.
    
    

Open Banking Connectivity

• Definition: Infrastructure connecting multiple banks for payment and data access.
  
• How it works: Streamlines access to account information.
  
• How Aeropay uses it: Aeropay uses this connectivity to simplify pay by bank and A2A payments.
  
  

Bank Aggregation

• Definition: Collects account information from multiple banks in one place.
  
• How it works: Consolidates account and transaction data from thousands of banks, enabling verification, balance checks, and risk assessment.
  
• How Aeropay uses it: Aeropay uses its Aerosync platform for quick and reliable bank connectivity.
  
  • Learn more about Aerosync
  • Aerosync press release
    
    

Data Aggregation

• Definition: Analyzes balances, transactions, and activity across multiple accounts. Aeropay leverages Aerosync to provide actionable insights.
  
• How it works: Aggregates financial data to assess account health, transaction patterns, and risk indicators.
  
• How Aeropay uses it: Supports payment verification, real-time risk scoring, fraud prevention, and reliable bank-to-bank money movement.
  
  

Guaranteed vs Non-Guaranteed Payments

Guaranteed ACH

• Definition: ACH payment backed by a settlement guarantee.
  
• How it works: Ensures funds settle successfully even if a bank return occurs.
  
• How Aeropay uses it: Aeropay provides settlement guarantees to protect businesses and cash flow.
  
  • What is Guaranteed ACH and Why's it Important?
    
    

Non-Guaranteed ACH

• Definition: ACH payment without a settlement guarantee.
  
• How it works: Businesses assume return risk.
  
• How Aeropay uses it: Aeropay helps manage risks of non-guaranteed payments.
  
  • What is Guaranteed ACH and Why's it Important?

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Settlement Guarantee

• Definition: Commitment that a payment will settle successfully.
  
• How it works: Provides predictable cash flow.
  
• How Aeropay uses it: Aeropay ensures payment completion under its settlement guarantee.
  
  

Return Risk

• Definition: Likelihood of a payment failing or being returned.
  
• How it works: Businesses monitor and mitigate this risk.
  
• How Aeropay uses it: Aeropay reduces return risk via verification, A2A payments, and risk scoring.
  
  

NSF (Non-Sufficient Funds)

• Definition: When a bank account lacks enough funds to complete a payment.
  
• How it works: Causes payment returns or failures.
  
• How Aeropay uses it: Aeropay minimizes NSF issues through pre-checks and authorization.
  
  • Learn more in Aeropay’s guide to preventing failed bank payments.
    
    

Payment Failure

• Definition: A bank payment that cannot be processed or does not settle.
  
• How it works: Triggers resubmission or error handling.
  
• How Aeropay uses it: Aeropay tracks and resolves payment failures efficiently.
  
  • Review Aeropay’s resource on payment statuses and declines.
    
    

Risk, Fraud & Compliance

Risk Scoring

• Definition: Evaluates probability of payment failure or fraud.
  
• How it works: Helps prevent failed or unauthorized transactions.
  
• How Aeropay uses it: Aeropay scores payments in real-time to improve success rates.
  
  • Explore Aeropay Guard and our approach to risk management in faster payments.
  • Why faster payments require intelligent risk management
    
    

Fraud Prevention

• Definition: Detects and prevents unauthorized payments.
  
• How it works: Monitors for suspicious activity.
  
• How Aeropay uses it: Aeropay protects consumers and businesses from fraudulent transactions.
  
  • Learn how Aeropay detects and prevents fraud across bank-based payments.
  • See Aeropay’s help-center guide to fighting fraud
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Identity Verification (IDV)

• Definition: Confirms a customer’s identity before allowing payments.
  
• How it works: Reduces unauthorized access.
  
• How Aeropay uses it: Aeropay ensures only authorized users make payments.
  
  

KYC (Know Your Customer)

• Definition: Regulatory process to verify customer identities.
  
• How it works: Ensures compliance with financial regulations.
  
• How Aeropay uses it: Aeropay performs KYC for compliance and fraud prevention.
  
  

KYB (Know Your Business)

• Definition: Confirms legitimacy of businesses.
  
• How it works: Prevents fraud from fake entities.
  
• How Aeropay uses it: Aeropay ensures all businesses using the platform are legitimate.
  
  

Transaction Monitoring

• Definition: Continuous oversight of transactions.
  
• How it works: Detects anomalies and suspicious activity.
  
• How Aeropay uses it: Aeropay monitors all transactions to prevent fraud.
  
  

AML (Anti-Money Laundering)

• Definition: Regulatory controls to prevent money laundering and illegal activity
  
• How it works: Ensures compliance and safe financial systems.
  
• How Aeropay uses it: Aeropay enforces AML regulations on all transactions.
  
  

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Merchant Operations & Payment Performance

Payment Reconciliation

• Definition: Ensuring payments match deposits and records.
  
• How it works: Maintains accurate bookkeeping.
  
• How Aeropay uses it: Aeropay reconciles all incoming payments efficiently.
  
  • See Aeropay’s explanation of how settlements and reconciliation work.
    

Authorization Rate

• Definition: Percentage of payments successfully authorized.
  
• How it works: Measures transaction success.
  
• How Aeropay uses it: Aeropay maximizes authorization rates through verification and risk scoring.
  
  

Return Rate

• Definition: Percentage of ACH payments returned due to errors or insufficient funds.
  
• How it works: Measures reliability of payment processing.
  
• How Aeropay uses it: Aeropay tracks and reduces return rates for better performance.
  
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  • Explore Aeropay’s breakdown of pay-by-bank approval and return rates.

Money Movement

• Definition: The process of initiating, transferring, and settling funds.
  
• How it works: Ensures funds reach the intended destination.
  
• How Aeropay uses it: Aeropay streamlines money movement for businesses of all sizes.
  
  • https://www.aeropay.com/blog/open-banking-payments

Payment Routing

• Definition: Determining the optimal path for each payment.
  
• How it works: Maximizes success and minimizes delays.
  
• How Aeropay uses it: Aeropay selects the best route for each transaction.
  
  

Tokenized Bank Access

• Definition: Replaces sensitive bank account info with secure tokens.
  
• How it works: Enables safe repeat payments.
  
• How Aeropay uses it: Aeropay uses tokenization to protect customer data.
  
  

Payer Authorization

• Definition: Explicit approval from a customer to make a payment.
  
• How it works: Ensures transactions are permitted.
  
• How Aeropay uses it: Aeropay verifies and records all authorizations for compliance and security.