Corporate Trade Exchange (CTX)

What Is the Corporate Trade Exchange (CTX)?

The corporate trade exchange (CTX) is an electronic funds transfer system used by companies and government agencies to make recurring payments to a number of parties with a single electronic funds transfer (EFT).

The CTX system replaced the corporate trade payment (CTP) system in the late 1990s; the CTP had been the primary inter-business payments platform from 1983.

How the Corporate Trade Exchange (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 the 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.

Because the CTX format allows for a large number of addenda records, a single CTX payment is able to cover several invoices as full information of each invoiced transaction will be transmitted together with the total payment.

Fast Fact

The CTX was originally adopted by the federal government to process identical recurring payments, like social security checks, to a large number of recipients.

Special Considerations

Systems like the CTX have been in use since the mid-1970s. These were 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. Prior to the CTX, the primary payments platform was the Corporate Trade Payment (CTP) system, which was launched in 1983 to improve upon the legacy ACH systems of the '70s. CTP, however, also could not keep up with technological advances in information processing and was ultimately phased out with the passage of the Debt Collection Improvement Act of 1996.

The CTX system makes tracking payments easier and adds more extensive transaction records with each payment. The CTX system also corrected issues with the data content standard that the CTP used, which made it difficult to use in some cases. The Corporate Trade Exchange improved the data architecture and capacity further, using a standard known as ANSI X12, and the CTX remains in use to this day. X12 is an ANSI-accredited standard for interoperable electronic data interchange standards.

Payments made through the CTX still 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.