What You Need to Know About the ACH (Automated Clearing House) Network

Everyone wants to get their utility bills and mortgages paid on time when the month ends. The problem is; not many people are into writing checks, also, sorting fees to mail these bills is proving to be a hassle. A simpler way to go about it is to sign up for automatic payments with each company. By doing so, you can inform your utility and mortgage companies, to debit the corresponding laid down amounts from your account on specific days every month.

When the fixed date reaches, the receiving company (receivers) will contact the billers (originators) and ask them to request your bank to transfer the stipulated amounts from your eMerchant account (or any other) to the lender’s account in line with the written agreement when you signed up for automatic billing.

We may as well say the ACH Network is the hub of business in the United States, transferring money and data from one bank account to the next via Direct Deposit, and Direct payments. Additionally, the network offers ACH credit and debit transactions, international payments, one-time billing, recurring payments, business-to-business and customer-to-business transactions. Moving over $41 trillion transactions each year, and 24 billion electronic transactions, ACH is the fastest growing, safest and most reliable payment system.

Facts about ACH

  • ACH Network is a processing system where financial institutions carry out ACH transactions all through the day for afterward batch processing.
  • Instead of the conventional use of paper in carrying transaction data, as with checks, the ACH Network transmits transactions electronically which is fast and cost saving.
  • With ACH Network you can process two types of transactions including Direct Payments via ACH and Direct Deposits via ACH.
  • Direct Deposit via ACH is depositing funds for employee expense reimbursement, payroll, tax, government benefits, as well as refunds and interest payments. This also includes any credit payment from business to a consumer.
  • Direct Payment via ACH is when you use cash to make payments. Persons or businesses can make such payments as both ACH credit and debit.
    • For example; when a consumer pays bills through their bank or credit union, they have made a Direct Payment which is processed as an ACH credit.
    • ACH debit is when consumers set up a recurring monthly billing for a mortgage or maybe utility bill, and the amount is debited from their account automatically.
  • Both ACH credit and debit transactions are fast, the transfer of funds from a financial institution to another typically happens the next day.
  • NACHA Operating Rules states that ACH credits should be settled in one or two business days while ACH debits should be resolved on the next day.
  • What’s more, a recent improvement to the NACHA Rules today enables same-day settlement of practically all ACH transactions.

Now that you know what you can and can’t do when dealing with ACH processing, getting your bills paid on time should be smooth.