How ACH Payment Works

Oct 28th, 2014     Payments

ACH (Automated Clearing House) is the electronic mode  (without any sort of cheques) of bill payments and money transfers. ACH was started in late 1960s.  NACHA, the electronic payments association is the trustee of the ACH processing system. ACH transactions are more preferable in case of  employee wages, regular bill payments and etc. Before knowing how the transfers/ payments are done through the process of ACH you have to know what is ACH and why it is in use?

What is ACH?

ACH is the process of automatic transfer of money from sender to receiver using electronic mode of transaction. Electronic mode of transaction means transferring  do not need physical existence or checks to transfer money or to do a payment. This process is an easy, simple and fast going process. As every thing as its own pros and cons  apart from pros it have disadvantages too such as

  • You might withdraw more amount than existed in your account.
  • You might forget for the reason of payment.

Why ACH?

In the current situation using checks, going to banks and checking the status of our transfer is not a possible task and even time consuming process. ACH is the process of electronic mode of transaction it allows direct transfer, Money payment, Online bills and etc.

Business sector most probably prefer ACH payments. When customers had payment by other means with them they need to check the bank status to know about the transaction. Some times payments may lost it needs labor to correct ACH payments don’t have such type of issues. ACH payments are simple, fast and reliable.

Customers also feel comfortable with ACH payments as they don’t need to write checks and wait for mail for successful transaction. You can check the status of your transaction at that particular position no need to rush to bank if ACH mode is used for transaction.

How ACH Works?

ACH mode of transaction involves mainly-

  • Sender
  • Sender bank
  • ACH Operator (FedACH & EPN)
  • Receiver Bank
  • Receiver

ACH transaction involves mainly these areas to do ACH payment.

ACH payments

Where ACH is preferable?

  • Paying wages to an employee
  • Business – Business Payments
  • Direct Deposits
  • Transferring money from one bank to the other
  • Business pays to supplier
  • Online Bill Payments

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