The Automated Clearing House (ACH) is an electronic payment delivery system under the auspices of NACHA (National Automated Clearing House Association), a governing body of banks and processors. The primary payments transacted via ACH are Social Security payments and direct deposit of payroll.
Business to Individual ACH Payments – The movement of funds from a business/organization to an individual replacing cash or check payments. The most common ACH Credit payment is Direct Deposit of Payroll to employees. Other ACH Credit payments include: Travel/Business Expense reimbursement, Dividend Payments, and Refund Payments.
Business to Business ACH Payments – The movement of funds from a business/organization to another business or organization to fund a subsidiary/division/location or to replace other payment options for trading partners, vendors or suppliers. An ACH Credit Payment is a less expensive alternative to a wire transfer for large dollar disbursements.
ACH Product Benefits
- Cost Reduction/Containment – May reduce (or control) overall payment collection or disbursement costs (electronic processing vs. paper transactions)
- Collection/Payment Automation – The use of ACH services allows businesses/organizations to automate transactions which may in turn reduce their internal processing costs
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