Universal payment identification code definition

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What is the Universal Payment Identification Code?

The accounting staff of a business may not be inclined to issue bank account information to any outside parties, because someone could use the information to create an ACH debit that removes cash from the company bank account. Alternatively, the company switches accounts so frequently that it would have to continually issue notification changes to any customers making ACH payments into the account. Both issues are eliminated when the universal payment identification code (UPIC) is used.

The UPIC should be considered a banking address, rather than an account number. The corporate bank account number is linked to the UPIC. The UPIC then acts as a front that masks the underlying account number. When combined with a universal routing/transit (URT) number, the effect is to send the information associated with all incoming payments to The Clearing House Payments Company, which then processes the transaction into the company's actual bank account.

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Advantages of the Universal Payment Identification Code

Here are the key advantages of using the universal payment identification code:

  • Enhanced security. The UPIC protects sensitive bank account information by replacing it with a unique code. This reduces the risk of fraud since actual account details are not shared during transactions.

  • Consistent address retention. The company can retain the same UPIC, even if the underlying account number changes. If there is an account change, the new account number is simply linked to the existing UPIC. This allows a business to continue operating the same UPIC for extended periods of time, making it easier to coordinate electronic payments with customers.

  • No check fraud. There is no way for anyone to use the UPIC to commit fraud with a check, since the UPIC can only be used to clear electronic payments, not checks.

  • ACH debits are blocked. All ACH debit transactions are blocked through the UPIC, which eliminates the risk of someone extracting funds from the company bank account with such a debit. This means the company can freely distribute its UPIC information to the public without the risk of being hit with a series of fraudulent ACH debits that remove funds from its account.

  • Simplifies payment processing. A UPIC eliminates the need for businesses or individuals to repeatedly share complex banking details.

By providing a secure and efficient alternative to sharing sensitive account information, the UPIC is particularly beneficial for businesses, financial institutions, and individuals engaging in regular electronic transactions.