ACH transactions move money electronically and automatically.
The Automated Clearing House (ACH) interacts with all the banks in the United States to facilitate the movement of money from consumers to businesses, from businesses to businesses and from businesses to consumers in a national network. ACH interacts with the originating bank account as well as the destination bank account to process automated funds transactions, whether initiated through traditional banking institutions, over the Internet, at a place of business, through an Automated Teller Machine (ATM) or through the use of debit and/or credit cards.
ACH Transfers
An ACH transfer is the process of taking money from one account and depositing it into another account. When an ACH payment is scheduled, ACH takes the money from the originating account and verifies it before transferring the money to the destination account. ACH transfers are essentially electronic funds transfers (EFT), but do not require human involvement once they are set up. The process of an ACH transfer includes ACH debits and ACH payments.
ACH Debits
An ACH debit is the process of taking money from a bank account automatically. ACH will facilitate an ACH debit when a payment is scheduled, when a purchase is made or when a government agency initiates a levy for a consumer debt. When a consumer or business sets up automated payments, an ACH debit has to be initiated first.
ACH Payments
An ACH payment occurs when a consumer, business or government agency sets up automated payments for bills, memberships and even payroll delivery. The funds are delivered to the destination account on the arranged date for the amount desired. ACH payments also include consumer purchases, rental car authorizations and levies initiated by government agencies. ACH payments are facilitated by traditional bank accounts as well as debit cards.
Internet Transactions
The convergence of Internet technology and ACH-facilitated ACH transactions to occur over the Internet, allowing consumers, businesses and government agencies to move money from account to account using non-traditional banking institutions, such as PayPal. Additionally, Internet banking institutions can interact with traditional banking institutions through ACH, which accommodates purchases, memberships, subscriptions and payments.
