>I have a customer trying to transmit a NACHA direct deposit file to their bank. The bank is telling them they are sending a binary file and it needs to be ASCII. I can open the file in Notepad and it just looks like text to me. What are they talking about?

They don't know what they are talking about! They send you EITHER a binary file OR an ASCII file. A binary file can contain pure ASCII, and if so, they are called ASCII files or text files. Binary files are usually executable files.