Automated Clearing House

Automated clearing house (ACH) is the system administered by the National Automated Clearing House Association (NACHA) to transfer money electronically from one account to another. NACHA has been running the automated clearing house network since 1974. The automated clearing house uses a batch processing method to handle transactions rather than sending payments separately. Each transaction that enters the automated clearing house system is sorted according to destination and then stored until the next scheduled transmission period. Automated clearing house transactions are thereby processed faster than would be possible for paper checks, and with greater economies of scale. Uses of the automated clearing house include but are not limited to direct deposit of tax refunds, Social Security payments, payrolls, direct payment of insurance premiums, mortgages, bills, loans, and business to business exchanges. Operating rules for the automated clearing house network are periodically amended through a deliberative process with member banks, credit unions, small businesses, corporations, industry vendors, and consumer advocates.