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.
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.
Commonly Used ACH Formats
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.
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.