Legal Definitions - originator

In the context of electronic payments, an originator is the specific person or organization that starts a funds transfer. This term is primarily used when discussing certain types of electronic payments governed by Article 4A of the Uniform Commercial Code (UCC), which typically covers large-value, business-to-business, or institutional transfers rather than everyday consumer transactions.

Essentially, the originator is the party that gives the initial instruction to their bank to send money to another party's bank account.

• Example 1: Corporate Payroll

  A manufacturing company, "Global Innovations Inc.," needs to pay its 500 employees their bi-weekly salaries. Instead of issuing individual checks, Global Innovations Inc. sends a single instruction to its bank to electronically transfer the correct salary amount into each employee's bank account. In this scenario, Global Innovations Inc. is the originator because it initiated the entire series of funds transfers for its payroll.

• Example 2: Inter-Bank Settlement

  When "City Bank" needs to transfer a large sum of money to "Rural Credit Union" to settle an outstanding balance from various customer transactions, City Bank sends an electronic instruction through the banking system to move the funds. Here, City Bank acts as the originator of this specific funds transfer, initiating the movement of money between the two financial institutions.

• Example 3: Real Estate Purchase

  A real estate development firm, "Apex Properties LLC," is purchasing a new commercial building. To complete the transaction, Apex Properties LLC instructs its bank to wire a substantial down payment directly to the seller's bank account. Apex Properties LLC is the originator of this wire transfer, as they are the party that initiated the instruction for the funds to be sent.