Originating Depository Financial Institution Law and Legal Definition

The term Originating Depository Financial Institution (ODFI) is related to ACH (Automated Clearing House) services. The ODFC interlinks the Federal Reserve or the ACH network with the originator. The ODFC receives payment instructions from the merchant or originator and forwards payment entries to the correct ACH operator. It may deposit items directly with an ACH operator or operate through a third-party processor, which is the actual sending point. All operations conducted by the ODFI shall be in accordance with the rules prescribed by the National Automated Clearing House Association.