What does ACH mean in banking?

ACH stands for Automated Clearing House Network. The name refers to the fact it coordinates paperless electronic payments or automated money transfers between banks and financial institutions. In the US, ACH can sometimes be referenced casually as direct deposit, direct pay or electronic check.⁴ What are ACH payments?

What is an example of an ACH transfer?

ACH transfers include external funds transfers, person-to-person payments, bill payments and direct deposits from employers and government benefit programs. Business-to-business payments are another example. (If you own a small business, see our guide to ACH transfers for businesses.)

What is direct payment via ACH?

Direct Payment via ACH is the electronic transfer of funds in order to make a payment. Companies sometimes refer to it by other names like automatic bill payment, automatic debit, electronic bill payment, e-check or direct debit⁵. As an individual, you can use ACH to make payments through the Direct Payment system as an ACH credit or ACH debit.

Who handles ACH payments?

The Clearing House’s ACH payments service, called the Electronic Payments Network, is responsible for approximately half of all U.S. commercial ACH payment volume. The U.S. Federal Reserve banks handle the other half of ACH transactions. ACH payments are processed in batches daily—not in real time.