US Banking
Automated Clearing House
ACH (Automated Clearing House) is a US electronic payment network that processes batch transfers between bank accounts. Governed by NACHA (the National Automated Clearing House Association), it handles payroll direct deposits, bill payments, government benefits, tax refunds, and person-to-person transfers. The ACH network moves trillions of dollars annually and is the backbone of US electronic funds transfers.
ACH transactions are initiated by an originator (the party sending or requesting funds) through their bank, called the Originating Depository Financial Institution (ODFI). Transactions are grouped into batches and sent to an ACH operator (the Federal Reserve or EPN) for clearing. The operator sorts the transactions by routing number and delivers them to the Receiving Depository Financial Institution (RDFI). Standard ACH settles in one to two business days, while same-day ACH allows settlement within hours. You can validate a routing number for ACH transfers using BankCheck.
ACH is the lowest-cost way to move money between US bank accounts, with fees typically under a dollar per transaction compared to $15-$30 for wire transfers. Understanding ACH timing and cut-off schedules helps you plan cash flow and avoid overdrafts from pending debits.
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