An ACH payment is an electronic fund transfer made between banks and credit unions across the Automated Clearing House (ACH) network. The ACH system is a computer-based electronic network for processing transactions, usually domestic low-value payments, between participating financial institutions. ACH payments are 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. ACH payments are processed in batches of payments containing numerous transactions, and the fees charged are low enough to encourage its use for low-value payments.
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. The ACH network is a batch processing system that banks and other financial institutions use to aggregate these transactions for processing. The ACH network is used for electronically moving money between bank accounts across the United States. The ACH network may also be referred to as the ACH payment system, scheme, or simply as ACH.
While many ACH payments clear quickly, transactions can sometimes take several days to complete due to the way in which an ACH is processed and precautions against fraud and money laundering. ACH transactions can trigger a return notification if there are insufficient funds in the account.
