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Overview : Automated Clearing House

With the growth of economy, the volume of non-cash retail and commercial payment has replaced the earlier paper based payment methods like cheques etc. ACH is one of the most popular network for transferring funds electronically in US. ACH stands for ‘Automated Clearing House, it is an electronic payment option or net settlement system used for electronic payments between banks. This processing occurs between a national network of banks or financial institutions that send messages electronically, via telecommunications lines instead of paper (checks), to transfer funds between two parties. ACH processes large volumes of credit and debit transactions in batches. With an ACH payment, a customer’s account is debited, and the funds are then credited to the trader or supplier’s account.


The ACH system is used for large-volume, low-value payments, such as payroll direct deposits, business-to-business payments,dividends, tax payments, and and many more payment services. The ACH network acts as the central clearing facility for all Electronic Fund Transfer (EFT) transactions that occur nationwide, representing a crucial link in the national banking system.  Both the government and the commercial sectors use ACH payments. Businesses are also increasingly using ACH to collect from customers online, rather than accepting credit or debit cards.

Benefits/Advantages Of ACH
  • ACH automates the time consuming methods of using cash and checks to make payments.
  • ACH eliminates the delay and risk associated with the cash payments
  • ACH ensures accurate and speedy results on higher volume of transactions
  • A multi‐currency and multi‐lingual system.
  • The tiered security structure results in greater data security.

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