What is the purpose of an Automated Notification of Change (COR) in an ACH transaction?

The purpose of an Automated Notification of Change (COR) in an ACH transaction is to correct an erroneous item. When a financial institution identifies an error related to a customer's account information—such as a change in the account number or routing number—they can use the COR to inform the originating party about the necessary updates. This ensures that future ACH transactions are processed accurately, minimizing errors and enhancing efficiency in the payment system. The COR serves as a proactive approach to maintaining the integrity of transaction information, which is vital for seamless electronic payments.