what is ach

ACH stands for Automated Clearing House, which is a computer-based electronic network for processing transactions between participating financial institutions. The ACH system is designed to process batches of payments containing numerous transactions, and it charges fees low enough to encourage its use for low-value payments. ACH is used for all kinds of fund transfer transactions, including direct deposit of paychecks and monthly debits for routine payments. Merchants often enable consumers to pay bills via ACH by providing an account number and bank routing number. A number of online payment services also conduct transactions via ACH, including most banks and credit unions’ online bill payment services. The ACH network is organized and administered by Nacha, formerly the National Automated Clearing House Association, which was founded in 1974 to improve the U.S. payments system.