About ACH Payments
Automated Clearing House (ACH) payments are a form of electronic funds transfer (EFT) that allow for the sending of funds from one US bank account to another. ACH payments have existed for over 40 years. Payments are facilitated by the ACH network, a network that is a nationwide batch-oriented electronic funds transfer system that is operated Federal Reserve and governed by the National Automated Clearing House Association (NACHA) and their operating rules. These rules provide the means by which interbank clearing of electronic payments works for depository financial institutions that participate in the ACH network.
Who Uses ACH Payments
Many businesses and Federal government entities alike have been long-time users of ACH payments, using them primarily as a means to direct deposit payroll, benefits and tax returns. More recently the popularity of ACH payments has also grown among consumers as an efficient means of paying recurring bills, for things such as loans, mortgages and utilities.
ACH payments are commonly used for:
- Direct deposit of company payroll and by Federal government entities to pay social security and other government benefits, along with tax refunds;
- Direct payment by consumers for bills such as loans, mortgages, utilities and insurance premiums. These include both one-off and recurrent payments.;
- Payments between businesses (B2B);
- Local, federal and state tax payments.
ACH Processing: Facts and Statistics
ACH Processing Facts
- The ACH Network works as a batch processing system that allows financial institutions to accumulate ACH transactions throughout the day before submitting them as a batch for processing
- Unlike traditional cheques, ACH payments transmit transaction data electronically, allowing for much faster processing times and lower cost
- There are two types of transaction that can be processed through the ACH Network – Direct Deposits and Direct Payments
- Direct Payment via the ACH network is the use of funds in order to make a payment. Both organizations and individuals can make Direct Payments through the network, as either an ACH credit or ACH debit
- Direct Payments processed as ACH credits push funds into a bank account. Examples of this would include when a customer initiates a payment with their bank to pay a bill
- Direct Payments processed as ACH debits pull funds from a bank account. Examples of this would include when a customer sets up a recurring monthly payment, such as in the case of loan, mortgage or utility bill payments
- Both ACH credit and ACH debit transaction are processed quickly, with funds typically being transferred and settled from one financial institution to another the very next business day
- NACHA Operating Rules require ACH credits to settle within 1-2 business days and for ACH debits to settle on the very next business day. Additionally, NACHA recently enhanced their operating rules to enable same-day settlement of most ACH transactions
ACH Processing Statistics
- Total volume of ACH Network transactions grew to 23 billion in 2014, an increase of 5% on 2013
- Total dollar value of ACH Network transactions exceeded $40 trillion in 2014, an increase of 3% on 2013
- B2B transaction volume through the ACH network increased 7.3% in 2014
- Recurring payments account for almost half of all ACH network transaction volume, growing 4.4% in 2014
Find out more about Transact24’s ACH payment processing solution
If you want to find out more about Transact24’s ACH payment processing solution, how it works and how it can help you and your business, please get in contact with us for more information.
You can do so by email or via the form provided on the contact us section of our website. Once we receive your request for more information one of our ACH sales representatives will be in contact with you within 24-48 hours.
Getting started with ACH Processing from Transact24 is simple. Just drop us a line using our contact form and we’ll be in touch to get the ball rolling