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ACH

Overview[1]#

ACH or Automated Clearing House, is an electronic Funds Transfer System (network) for Payment Transactions in the United States

Normally ACH refers to the Automated Clearing House used in the United States. The ACH Network serves as a network for direct consumer, business, and government payments, and annually facilitates billions of payments such as direct deposit and direct payment.

ACH direct debit transfers include consumer payments on insurance premiums, mortgage loans, and other kinds of bills. Debit transfers also include new applications such as the point-of-purchase (POS) check conversion pilot program sponsored by NACHA.

Both the government and the commercial sectors use ACH payments. Businesses often use ACH online to have customers pay, rather than via Payment Cards.

Rules and regulations that govern the ACH network are established by National Automated Clearing House Association (NACHA) and the Federal Reserve.

The Federal Reserve Banks, through the FedACH system, are collectively the nation's largest ACH operator composed of 60% of commercial interbank ACH transactions; the remaining 40% was processed by the Electronic Payments Network (EPN), the United States' only private-sector ACH operator. Electronic Payments Network and the Federal Reserve Banks rely on each other for the processing of some Transaction Accounts when either party to the transaction is not their customer. These interoperator transactions are settled by the Federal Reserve Banks.

Payment Cards transactions NOT handled by ACH networks but rather by private Payment Card Payment Networks

More Information#

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