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). For years, the most notable electronic payment program offered was Direct Deposit.

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. The average dollar value of a Direct Payment was $759.

New Initiatives

ACH Transaction Flow
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

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-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.

The Buyers Guide lists many vendors that support and sell ACH services.