CPA-005 EFT files, explained for carriers who pay by bank file

What CPA-005 is

Payments Canada is the operating brand name of the Canadian Payments Association, which is where the CPA in CPA-005 comes from. Its Standard 005, titled Standards for the Exchange of Financial Data on AFT Files, describes the layout of automated funds transfer (AFT) files: what each record contains, how wide each field is and what makes a file or a payment invalid. People in the industry call it CPA-005, CPA 005 or simply an EFT file.

Payments Canada’s Rule F1 governs how AFT transactions are exchanged between financial institutions using Standard 005, for clearing and settlement, and it applies to Canadian dollar and US dollar AFT transactions. The rules now also accommodate ISO 20022 message formats for AFT, so ask your bank which file formats it accepts for uploads.

For a carrier, the practical meaning is simple. You build a file in this layout, upload it through your bank’s business banking, and release it there. Your bank checks it, sends the payments into the clearing system, and the money lands in each payee’s account on the date you chose. Your bank’s EFT agreement and file specification set the exact rules it applies to your files, so ask for both when you set up.

Credits versus debits

Every AFT payment is either a credit or a debit, and the standard gives each a different logical record type:

• Credits (record type C) put money into the payee’s account. Paying an owner-operator’s settlement, a repair shop or a fuel supplier is a credit. This is what most carriers use EFT files for.
• Debits (record type D) are pre-authorized debits: you pull money from someone else’s account with their written authorization. Collecting from customers this way falls under Payments Canada’s Rule H1, which requires a payor’s PAD agreement and a written payee letter of undertaking with the financial institution that holds your account.
• Reversals (types E and F) let the originator reverse a credit or a debit sent in error.
• Returns (types I and J) come back from the receiving institution when a payment is unpostable, dishonoured or refused at the branch of account.

The standard allows credits and debits in the same file, but your bank may set them up as separate services with separate agreements. If you only pay people, you only need credit origination.

The EFT agreement and your Originator ID

You cannot just upload a file to your business account. Your bank first sets you up as a payment originator, which Rule F1 defines as a business or other entity that, with authorization from its payee or payor, initiates an AFT transaction. Ask your business banking contact for EFT or AFT file origination; banks give the service different names.

Setup usually involves a written agreement, limits on file totals, the account the payments will be drawn from, and an Originator ID. In the standard this is a 10-character field in the file header used to identify the originator of the file. Your bank assigns it, and every file you send must carry it. A file with an invalid originator identification is rejected.

The record types, at a high level

A Standard 005 file is a series of fixed-width logical records, 1,464 characters each for the payment record types. The first record must be type A and the last type Z.

The payee’s bank is identified by a nine-digit institutional identification number: a zero, the three-digit institution number and the five-digit branch transit number. Numeric fields are right-justified and zero-filled, text fields are space-filled, and dates are written as a zero, the two-digit year and the day of the year.

The cross-reference field is yours to use for your own reference, such as the settlement or bill number. Fill it in: it is how you match a returned payment back to what it paid.

Cut-off times and settlement

Rule F1 sets the schedule between financial institutions. Files are exchanged in three daily periods ending at 09:30, 16:30 and 21:00 Eastern time on business days. Your own bank sets an earlier customer cut-off for file uploads so it can process your file before its exchange deadline, and that is the time that matters to you.

Each credit carries a date funds are to be available. Depending on the receiving branch, credits must be exchanged up to two business days before that date, and the receiving institution must make the funds available by the opening of business on that date, or within two hours of the exchange deadline for some branches. Settlement between the institutions happens on the business day after the due date.

Standard 005 also limits the date you can choose. A credit dated more than 14 days after the file’s creation date, or more than 30 calendar days before it, is rejected. A date that falls on a non-business day is treated as the next business day.

In practice, ask your bank how many business days ahead it needs a file and what its daily cut-off is. If it needs one business day, a pay run meant to land on Friday has to be uploaded and released before Thursday’s cut-off.

Why carriers move from cheques

A cheque run takes time to print, sign, mail and clear, and an owner-operator waiting on a settlement notices every day of it. An EFT file built from bills and settlements you already approved replaces that with one upload. It also removes cheques lost in the mail, stale-dated cheques and the payee who deposits a cheque twice.

Banks charge for both, so compare your own bank’s fee per EFT item with the full cost of a cheque: stock, envelopes, postage, signing time and the follow-up calls when one goes missing.

Controls: approvals at the bank

A bank file is a fast way to move a lot of money, so put the controls where the money moves: at your bank.

• Dual approval. Set business banking so one person uploads the file and a different person releases it.
• Limits. Ask for file and item limits that fit your normal pay runs, so an unusual file needs extra sign-off.
• Banking changes. Verify every change to a payee’s banking details by phone at a number you already have. A forged email asking you to update an owner-operator’s account is a well-known way to redirect a payment.
• Reconcile. Match the file total to the debit on your bank statement, and follow up every returned item.

What gets a file rejected

Standard 005 lists the reasons a readable file is rejected outright: a missing A or Z record, a file that is out of balance with its Z totals, an invalid data element, record types mixed in a way the standard does not allow, or a file from a defaulting institution. The file creation number must go up by one with each file (rolling over from 9999 to 0001), and a duplicated number gets the file rejected.

Individual payments are rejected, or may be, for problems such as:

• an amount of zero;
• an institution and transit number that is not on the Payments Canada financial institutions file;
• a blank or invalid payee account number;
• missing originator short or long names;
• a date funds to be available outside the allowed window.

Under Rule F1, rejected transactions come back to the originating institution with a 900-series transaction type and the invalid field identified, and a rejected payment can only be resubmitted as a new transaction. Returns are different: the payment passed the checks but the receiving branch could not post it, and it comes back with a return reason code.

How TruckerPro Finance handles it

On the Plus plan, TruckerPro Finance creates CPA-005 files from the bills you are paying and the approved owner-operator and contractor pay runs. Each file has a header with your Originator ID, one credit record per payment with the batch reference in the cross-reference field, and a trailer with the count and total. You download it and upload it to your own Canadian bank, and your bank moves the money; TruckerPro never holds or moves funds. Each payment is recorded against its bill or settlement.

Files are Canadian dollar only, and you need your bank’s EFT agreement and Originator ID before the first one. Each file takes the next file creation number from that bank account once, and downloading it again gives you the same file. To correct one, you discard it and create a new file under a new number, which is not allowed once the file is marked as sent to the bank.

A payee only goes into a file once their banking is on file and marked for EFT. Institution and transit numbers with the wrong number of digits, incomplete banking and payments in another currency stop the file with the payee named, instead of being quietly changed or dropped. EFT files cover vendor payments and contractor pay runs, not employee payroll. Compare the plans.