What does the term “final settlement” mean in relation to RDFI acceptance?

The term "final settlement" in relation to the receiving depository financial institution's (RDFI) acceptance refers to the completion of the transaction process. This concept signifies that all the necessary steps and processes related to an ACH transaction have been successfully concluded, and the funds have been transferred from the originating bank to the receiving bank. Once final settlement occurs, the RDFI has officially accepted the transaction, which enables the recipient to have access to the funds.

This term is crucial in ACH transactions because it marks the point at which the transaction is irrevocable, meaning that it cannot be undone. Understanding when final settlement occurs helps stakeholders in the ACH process to manage their records, reconciliations, and consumer and business expectations regarding fund availability.