ACH payments and wire transfers are the most commonly used methods of transferring funds electronically within the United States.
Wire transfers are best suited for high dollar transfers must which must be sent or received quickly, within the same day or by next banking day. ACH payment processing is best method for transmitting high volumes of lower value electronic funds transfers.
Instead of sending transactions separately, ACH payments are batched together in a file to be cleared through the Federal Reserve. ACH processing is much less expensive than wire transfers.
The ACH network is not a real time system. Files are cleared through the Federal Reserve at midnight of the day following file submission. Merchants that ship goods are well-advised to wait until the transaction is cleared to mitigate the risk of returns for non-sufficient funds.
There are 5 participants in the ACH network.
An Originator is a person or entity that initiates the ACH payments Originators are a companies or individuals that direct a transfer of funds to or from consumers’ or companies’ accounts.
2) Originating Depository Financial Institution (ODFI)
An ODFI is a financial institution that receives payment instructions from Originators and forwards the entries to the ACH network.
ODFI responsibilities include:
3) Automated Clearing House Operator
An ACH Operator is a central clearing facility to or from which participating financial institutions send or receive ACH entries.
4) Receiving Depository Financial Institution (RDFI)
A RDFI is a participating financial institution which receives entries for debit or credit to the accounts of its customers as Receivers.
An RDFI’s responsibilities include the following in regard to receipt of ACH files:
A Receiver is an individual or an organization which authorized an Originator to initiate an ACH entry to the Receiver's account with the RDFI.
ACH payments are a safe, secure, and inexpensive method for sending and receiving money.
ACH credits give you the ability to direct deposit funds to bank accounts. ACH debits automatically deduct funds from consumer or business bank accounts. The funds are then electronically deposited to your bank account.
The ACH network is one of the oldest and most secure methods for electronic funds transfer in the world. Millions of US business and consumers regularly use the ACH network to send and receive money.
Interested in establishing an ACH processing account?
Contact info@NationalACH.com today