Automated Clearing House

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Automated Clearing House (ACH) is an electronic network for financial transactions in the United States. ACH processes large volumes of both credit and debit transactions, which are originated in batches. Rules and regulations governing the ACH network are established by NACHA-The Electronic Payments Association (formerly the National Automated Clearing House Association) and the Federal Reserve (Fed). In 2002, this network processed an estimated 8.05 billion ACH transactions with a total value of $21.7 trillion.[1] (Credit card payments are handled by separate networks.)

Contents

[edit] Common Issues

ACH payments have been around for some time now, but people are just getting used to them, especially with the ARC, POP, and RCK, where the original instrument was a physical check. One problem occurs when the account holder issues a stop payment on a physical check not knowing that the check was presented as an ACH entry.

A time frame problem can cause potential loss towards an RDFI due to irregular time frames provided for the return of ACH entries that are subject to Electronic Funds Transfer Act (Regulation E). An example is a POP and ARC entry, where an RDFI has only 60 days from the date of settlement to return an unauthorized debit, and the consumer has 60 days upon notification to dispute a transaction in his statement under Regulation E. With these time frames, it is possible that the 60-day period allowed for ACH return would expire even before the consumer's 60-day protection (under Regulation E) would expire.

Time frame Problem

Another problem deals with compliance where the merchant causes an ODFI to issue an ARC or POP entry (for check presentment) and then fails to comply with the handling of the physical check and presents the physical check for payment as well. This causes a double-debit against a consumer account.

[edit] See also

[edit] References

  1. ^ What is Automated Clearing House? - a definition from Whatis.com - see also: ACH

[edit] External links

Retrieved from "http://en.wikipedia.org/wiki/Automated_Clearing_House"
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