what is automated clearing house

An Automated Clearing House (ACH) is a computer-based electronic network for processing transactions between participating financial institutions. It is primarily used for domestic low-value payments, such as direct deposit of payroll, consumer bill payments, and other regular or membership-style payments. 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 transactions require a debit from an originating bank and a credit to a receiving bank, and they usually execute on the same day as long as they are done before 5 p.m. The ACH network is regulated by the federal government and managed by the National Automated Clearing House Association (NACHA).