ACH

The ACH Network is a processing and delivery system that provides for the distribution and settlement of electronic credits and debits among financial institutions. The National Automated Clearing House (NACHA) is responsible for maintaining and policing the electronic payments network commonly referred to as the Automated Clearing House (ACH).

Direct Deposit is the most widely used ACH payment.

Payments made via Direct Deposit:

  • Payroll
  • Expense and travel reimbursement
  • Pension and annuity payments
  • Interest payments
  • Retirement and mutual fund distributions
  • Social security
  • Veterans and other government benefits
  • Tax refunds

Electronic Payment Growth

Direct Deposit and Direct Payment
Direct Payment is a pre-authorized debit that uses the ACH Network, and is typically used for recurring consumer bills such as mortgages, loans, utilities, investments and charitable contributions.

Financial EDI is the electronic exchange of payments, payment-related information or financial-related documents in standard formats between business partners. Using ACH transaction codes CCD, CCD+, or CTX, remittance detail is included with the payment amount.

ACH Volume Statistics

ACH Transaction Flow


The ODFI (Originating Depository Financial Institution)warrants to the ACH network that the transactions it transmits to the network comply with the rules. The depository institution that is a member of ACH is usually a bank or other financial institution which is initiating a payment on behalf of its client.
RDFI (Receiving Depository Financial Institution)

ACH Credit Flow

ACH Debit Flow

Commonly Used ACH Formats

  • Cash Concentration or Disbursements (CCD)
    The CCD payment format is the only format that does not allow addenda records. Because remittance data is not transmitted with the payment, you will need to use an additional method to transmit remittance information.
  • Cash Concentration or Disbursement Plus Addenda (CCD+)
    The CCD+ format is identical to the CCD format with the addition of one addenda record. Part of the addenda record contains a payment related information field of 80 characters in which data segments can be used.
  • Corporate Trade Payments
    The Corporate Trade Payment (CTX) format was developed to permit the transmission of remittance information. CTX allows for up to 9,999 addenda records. CTX addenda records contain free form information that can accommodate the full EDI 820 Transaction Set or a subset of its segments.

RCK POP ACR Reference Guide

International ACH IAT
The IAT is used for Cross-border payments.

Tax Payments
Electronic tax payment programs usually offer two options, ACH debit or ACH Credit. An ACH Credit is an electronic funds transfer transaction in which the business authorizes its financial institution to send funds to the revenues department's account, allowing the business to initiate ACH credit transfers. You must set up this option with your bank. You are responsible to ensure your payment is received by the tax entity by the due date.

An ACH Debit is an electronic transaction in which the business authorizes the tax department's financial institution to withdraw funds from the business' account and deposit them into the department's account. The business initiates and specifies the amount and date of the withdrawal by calling a toll-free number at the Taxing body.

e-Check
e-checks are payments originated by a consumer as a paper check. Through various ACH programs these paper items are converted into an electronic item.


An ACH debit transaction in lieu of consumer checks that are truncated after being received through the U.S. mail or drop box location.

  • Check mailed for payment or dropped at unmanned drop-box
  • Consumer, first party checks
  • No dollar limit
  • Notification is provided prior to writing check
  • Check destroyed within 14 days, 2 year retention of copy
  • Once check is converted, it cannot be presented for payment
  • Original item must be destroyed and image maintained
  • Image cannot be presented for payment
  • This is not check collection

A debit transaction in place of a paper check after the paper item has been returned for insufficient or uncollected funds.

  • Check returned for insufficient (NSF) or uncollected funds.
  • Consumer, first party checks
  • Checks less than $2,500
  • Contains pre-printed number
  • Notification prior to writing check
  • No retention requirement, 7 year retention of copy
  • Total of 3 presentments allowed
  • Originator is required to be party to the debt
  • Check collection laws pertain
  • Written authorization is required for a fee
  • Clear authorization language stamped on the check is OK
  • The signature on the check is not authorization for a fee

One-time ACH debit entry to a Receiver's account for purchases made in-person at the point-of sale.

  • Check writer is present
  • Consumer, first party checks
  • No dollar limit
  • Check can only be used one time
  • Consumer signs an authorization
  • A receipt with specific information is given to consumer
  • Consumer must sign authorization
  • Check must be returned to consumer
  • Identify consumer for collection
  • Lack of evidence for prosecution
  • This is not check collection

Audio descriptions by: AnalyticResults

International ACH
As global business is expanding, the Federal Reserve Banks are keeping pace with customer demand for low-cost, efficient cross-border payments. FedGlobal ACH Payments deliver a wide range of payment options to help meet this demand, combining convenient access with robust customer support.

Regulation E prevents a company from initiating unauthorized debits from the consumers account. It also prohibits a biller from taking money from a checking or savings account before the specified date. In addition, the consumer's financial institution protects personal account information.


Federal Regulations
Title 12: Banks and Banking
Part 205 - Electronic Fund Transfers (Regulation E)

Regs issued by the Board of Governors of the Federal Reserve System pursuant to the Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.).
This part carries out the purposes of the Electronic Fund Transfer Act, which establishes the basic rights, liabilities, and responsibilities of consumers who use electronic fund transfer services and of financial institutions that offer these services.

Corporations originating large volumes of ACH transactions need to be aware of a rather complex set of association rules and regulations. Each year NACH publishes the definitive source for rules & regulations governing the ACH Network, Also included are: the Federal Reserve Uniform Operating Circular, Regulation E and Official Staff Commentary, Electronic Funds Transfer Act, Federal Tax Deposit Payments and Title 31 CFR Parts 208 and 210. Price includes updates throughout the year.