ACH
What is an ACH?
An ACH is an electronic network used for processing financial transactions in the United States. ACH transactions encompass direct deposits, payroll, vendor payments, and customer payments to businesses. Here are some key points about ACH:
- Types of Transactions: ACH handles both credit and debit transactions. An ACH credit pushes funds into an account (e.g., direct deposit), while an ACH debit pulls funds from an account (e.g., bill payments).
- Batch Processing: ACH transactions are processed in batches which are not instant but usually clear within one to two business days.
- Low Cost: ACH transactions are generally less expensive than wire transfers and credit card transactions, making them a cost-effective solution for businesses.
- Regulation: The ACH network is governed by the National Automated Clearing House Association (NACHA) in the U.S., ensuring compliance with specific rules and standards.
- Common Uses: ACH is normally used for direct deposit of payroll, Social Security benefits, tax refunds, and mortgage and utility payments.
What does ACH stand for?
ACH is the abbreviation for the Automated Clearing House network.