How ACH Works

The primary network for electronically settling monetary transactions between financial institution in the United States, the Automated Clearing House (ACH) is a highly reliable and efficient nationwide batch-oriented electronic funds transfer system.

Governed by the rules set forth by the National Automated Clearing House Association (NACHA), the ACH Network provides for the interbank clearing of electronic payments for roughly 98% of the depository financial institutions in the United States. Through this system, the Federal Reserve and Electronic Payments Network act as ACH Operators, providing the central clearing facilities through which financial institutions transmit or receive ACH entries.

Examples of ACH payments are direct deposit of payroll, Social Security and other government benefits, Federal and State tax payments and refunds, direct payments of consumer mortgages, loans, utility bills and insurance premiums, business-to-business payments, E-checks, E-commerce and Internet retail payments. In short, ACH payments are an option for virtually any business, public or commercial entity that receives payments.

ACH Payments include:
  • e-Commerce Payments
  • Business-to-business Payments
  • Direct Deposit of payroll, Social Security and other government benefits, and tax refunds
  • Direct Payment of consumer bills such as mortgages, loans, utility bills and insurance premiums
  • Federal, State and Local tax payments