What is the ACH Network?

Overview of the ACH Network

The automated clearinghouse network is also known as ACH.  The ACH network is a highly reliable and efficient nationwide batch oriented electronic funds transfer system. 

ACH is governed by operating rules of NACHA which provide guidance for interbank clearing of electronic payments for participating depository financial institutions.

The ACH network has been in service for over 40 years.  It is one of the most reliable payment processing systems in the world.

ACH payments are used for direct deposit of payroll, Social Security and other government benefits, tax refunds, payment of consumer bills, business-to-business payments, electronic checks, e-commerce payments, and for wide range of applications for electronic funds transfer.

Participants in the ACH Network

There are four parts of the ACH network.

1. Originator.  An originator is an individual corporation or other entity that initiates and trees into the ACH network.
2. Originating Depository Financial Institution (ODFI) that originates an ACH transaction.
3. Receiving Depository Financial Institution (RDFI) that receives ACH entries.
4. Receiver.  The receiver is an individual corporation or other entity that has authorized ACH transaction.

For more information on ACH processing, contact info@nationalach.com

Online Merchants Accept Electronic Checks

Merchants selling on the internet that are not accepting electronic checks are losing business.  Offering electronic checks as payments can increase sales up to 29%. 

The boost in sales comes from payments for orders that otherwise would have been lost.  Depending on the ACH electronic check provider, echecks can also cost substantially less than credit cards for a merchant to accept as a payment method.

Accepting checks online will increase sales by reaching out to households and shoppers who do not have credit cards or do not want to provide credit card information online. One of the limitations of accepting online checks is that the echecks clear through the ACH network and take time to clear.  And, there is the risk of bounced checks.

Merchants should wait to ship products until the electronic check clears through the consumer’s checking account.  Merchants can get guarantees on online checks by paying extra discount points.  But, unless the average ticket on a sale is high, check guarantee doesn’t make sense because, over all, the cost of guarantee will be higher than bounced check losses.

For more information, contact info@nationalach.com today