What is the Automated Clearing House (ACH) Network?
The ACH Network is an electronic payment processing platform through which monies and payment-related data flows. The network is a safe, secure, method for transferring consumer, business, and government payments. Billions of dollars are processed annually through ACH, including direct deposits and direct payments. The network is governed by NACHA Operating Rules, which give the guidelines to management risk and assure payment completion for all participants.
Quick ACH Facts
- ACH is a batch processing system, not a real time system. Financial institutions accumulate ACH transactions throughout the day for batch processing through the Federal Reserve at midnight of the following day.
- ACH eliminates the use of paper checks. Instead, transactions are transmitted electronically, which translates into faster processing times and substantial cost savings.
- There are 2 types of transactions processed through the network: Direct Deposits and Direct Payments.
- ACH Direct Deposit is used for primarily for payroll, employee expense reimbursement, government benefits, tax and other refunds, and annuities and interest payments. It is increasing being used by companies to pay vendors, suppliers and customers.
- Direct Payment electrictroncially transfers funds to make payments. Consumers or organizations make a Direct Payments via ACH as either an ACH credit or an ACH debit.
- Direct Payments as an ACH credit pushes monies into an account. A good example is when a consumer initiates a payment through his/her bank to pay a bill.
- Direct Payments processed as an ACH debit pulls monies from an account. An example of this is a recurring monthly payment for a mortgage, rent or utility bill
- Both ACH credit and ACH debit transactions process quickly. Settlement, or the transfer of funds from one financial institution to another to complete the transaction, generally takes only one business days, although it can take up to 4 days for end-to-end processing
ACH Network: Quick Stats
- In 2011, the ACH Network processed 20.2 billion transactions.
- In 2011, the total dollar value of ACH Network transactions was $33.91 trillion.
- In 2011, the ACH Network processed 9.48 billion ACH debit transactions and 6.60 billion ACH credit transactions.
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