ACH (Automated Clearing House)

Automated Clearing House (ACH) is a network for processing electronic credit and debit transactions in the United States that is operated by the National Automated Clearing House Association (NACHA).

ACH enables financial institutions to electronically communicate and transfer funds between accounts. Transactions processed through the ACH network include direct deposits, bill payments, business-to-business payments, and e-commerce payments.

The ACH network functions as a secure, efficient, and cost-effective alternative to paper checks, wire transfers, and credit card transactions. Its operation involves a series of steps where transactions are batch processed, accumulated, and settled at specified intervals throughout the day. The process eliminates the need for physical checks to be exchanged between financial institutions, reducing costs and time of processing.

The ACH network is heavily regulated, with a range of rules and standards designed to protect consumers, businesses, and financial institutions. These rules cover a variety of areas, including transaction authorization, dispute resolution, transaction settlement timelines, and more.

Overall, the ACH network plays a critical role in the U.S. payment system, handling billions of transactions each year.