How does ACH Deposit work (USA) - account holder name mismatch?

Question

I would have a question related to ACH deposit where payment processor behind the website (i think it is Stripe processor) request, in Banking part of webpage section, only account number and routing number (ach routing and not wire routing). How does ACH deposit work? When payment processor sends funds via ACH do they really use strictly only account number and ach routing number or do they use anything else, e.g. account holder name? Can be ACH deposit from sender side even processed and finalized using strictly only account and routing number? I am asking you which parameters are required in order to finalize ACH transaction regardless of amount?

Defining the reason for my inquiry may make my question even more understandable: The payment processing team/department, behind the website, might be using incorrect name but 100% correct account and ach routing number. I cannot change the name on the website but the fact is that account holder name is completely different than name (first name, surname) on the actual bank account. Lets assume the sender of ACH is using wrong account holder name (the one that is NOT on receiving bank account: there is different name!!!) but correct account number, ach routing number, will funds still successfully arrive to the receiving bank account?

Basically from your answer I would like to know the level of importance how much important may be account holder name factor in ACH transactions.

Answer 1

You can get the file format specifications and most of the documentation related to ACH by googling, if you're actually interested in the fine details. The standards are probably a little looser than most people would assume, in order to allow flexibility. This basically forces financial institutions to make decisions based on their own risk tolerance or fraud practices.

That said, it seems like you're concerned about name matches, specifically. Although the "Name" field is required in the actual ACH transactions in the files used to implement the standard, essentially, there is no strict requirement imposed by the ACH process that requires name matches. Names are transmitted in plain text and are not always easy to match in the literal sense anyways, i.e. you may see Joe instead of Joseph.

Some financial institutions do choose to match names, either by software or manually, and sometimes that choice is dependent on the details about the transaction - for instance, they may review details for any transaction over a certain dollar amount, or only certain types of transactions (i.e. tax refunds posted by the IRS). At the end of the day though, if the account number matches, the receiving bank is allowed to complete the transaction even if the name is not matched to any name on the account.