ACH (Automated Clearing House) is a network used for electronically moving money between bank accounts across the United States. It’s run by an organization called Nacha (previously NACHA – National Automated Clearing House Association), and may also be referred to as the ACH network or ACH scheme.
Payment processing via the ACH network has existed since the 1970s. ACH moved financial transactions worth more than $61.9 trillion in 2020, an increase of almost 11 percent from the previous year. These included government, consumer, and business-to-business transactions, as well as international payments.
The ACH scheme encompasses a number of different types of payments, which we explore below
What is an ACH payment?
An ACH payment is a type of electronic bank-to-bank payment in the US. Payments via ACH are made through the ACH network, rather than going through the card networks such as Visa or Mastercard. An ACH payment is also commonly referred to as an ACH transfer or ACH transaction.
ACH payments can’t be made in the UK, Eurozone, or anywhere else outside the United States. The ACH network is a US payments network only. Additionally, the ACH network applies to banking, so you cannot process ACH payments from debit cards or credit cards.
There are two main categories of ACH payments:
- Direct Deposits
- Direct Payments
Direct Deposit covers all kinds of deposit payments from businesses or government to a consumer. This includes payroll, employee expense reimbursement, government benefits, tax and other refunds, and annuities and interest payments.
Direct Payment covers the use of funds for making payments, either by individuals or organizations. This type of ACH transaction is the primary focus of this guide – any reference to ACH payment, ACH transfer, or ACH transaction in this guide refers to Direct Payments, unless stated otherwise.
