What Is a Corporate Trade Exchange (CTX)?
A corporate trade exchange is an electronic fund transfer system used by companies and government agencies to make recurring payments to a number of parties with a single funds transfer.
How CTX Works
The use of CTX requires the agreement of both parties to permit fund transfers. This is called a trading partner agreement.
Each fund transfer through the CTX payment system contains several pieces of information that allow for aggregation of payments. This information is contained in an attached record of variable length, called an addendum record. The addendum record contains additional information, such as recipient identification, allowing for accurate payment and tracking.
CTX was originally adopted by the federal government to process identical recurring payments, like social security checks, to a large number of recipients.
A Detailed Look at the CTX
The CTX system has been used since the mid-1970s. It was originally adopted by the federal government as a more efficient means of processing identical recurring payments to many recipients. Social Security checks are an example.
Payments made through the CTX go through an automated clearing house (ACH) allowing each payment to clear in a single day. CTX is now used routinely for business-to-business payments. The system can be used for debits as well as credits.