Automated clearing house
What is ACH?
The ACH Network processes electronic financial transactions – such as Direct Deposit and Direct Payments – for consumers, businesses, and federal, state and local governments.
The ACH network is the system that makes it easy to send and receive money between bank accounts. Since more than 50 years ago, the ACH network has been in use. Most people agree that it is one of the safest and most reliable ways to process payments in the world.
The rules for how the ACH network works are set by NACHA.org, which is in charge of ACH payments. NACHA also tells participating depository financial institutions how to clear electronic payments between banks. Almost every bank in the US is part of the ACH network.
ACH credits are used to deposit paychecks, government benefits, tax refunds, and other payments directly into bank accounts. ACH debits are used to pay consumer bills, make payments from business to business, send electronic checks, pay for online purchases, and do a lot of other things that involve electronic funds transfer.
When your ACH merchant account is approved, you will be able to use both ACH debits and ACH credits.
PARTICIPANTS IN THE ACH NETWORK
There are four parts of the ACH network.
- Originator. An originator is an individual corporation or other entity that initiates and trees into the ACH network.
- Originating Depository Financial Institution (ODFI)that originates an ACH transaction.
- Receiving Depository Financial Institution (RDFI)that receives ACH entries.
- Receiver. The receiver is an individual corporation or other entity that has authorized ACH transaction.
Interested in more information on how ACH can help your business?
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