Automated Clearing House
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|Part of a series on financial services|
Automated Clearing House (ACH) is an electronic network for financial transactions, generally domestic low value payments. An ACH is a computer-based clearing and settlement facility established to process the exchange of electronic transactions between participating financial institutions. It is a form of clearing house that is specifically for payments and may support both credit transfers and direct debits.
ACHs are designed for high-volume, low-value payments, and charges fees low enough to encourage the transfer of low-value payments. The system is designed to accept payment batches, so that large numbers of payments can be made at once. ACH payments contrast with Real-time gross settlement payments which are processed immediately by the central RTGS system and not subject to any waiting period on a one-to-one basis. ACH systems are typically used for low-value, non-urgent transactions while RTGS systems are typically used for high-value, urgent transactions.
ACHs process large volumes of credit and debit transactions in batches. ACH credit transfers include direct deposit, payroll, retail payments and vendor payments. ACH direct debit transfers include consumer payments such as utility bills, insurance premiums, mortgage loans, and other types of bills. Transactions received by the bank during the day are stored and transmitted in batches to the ACH.
ACHs are net settlement systems, so settlement may be delayed for day(s), and there is some settlement risk. ACHs may allow for the transfer of a limited amount of additional information along with payment instructions.
- The payer manually initiates an ACH transaction or submits a file of ACH transactions to its bank, containing a batch of payment information.
- The bank assembles all ACH payments from different sources (manual and uploaded files) into periodic batches which are handled in cycles at the ACH and sends it to the ACH operator.
- The ACH operator nets the payment information submitted by the banks within each cycle and notifies them of the settlement amounts for which they are responsible for that cycle.
- If settlement amounts are received from all participants for the cycle, the ACH operator informs the beneficiary's bank of the payment details.
- When payments arrive in the accounts of beneficiary bank, the bank credits the payment to the beneficiary, while the ordering customer's bank debits the ordering customer's accounts for the related amount.
ACH systems around the world
- US: NACHA's ACH Network and The Clearing House's Electronic Payments Network
- Europe: a Pan-European automated clearing house for the Single Euro Payments Area, STEP2
- 27 ACHs from 22 countries across Europe:, including
- Austria: GSA and Oesterreichische Nationalbank
- Belgium: CEC
- Brazil: SPB - Sistema_de_Pagamentos_Brasileiro
- Bulgaria: BORICA AD
- Croatia: FINA
- Denmark: Eurogiro and Nets Group
- France: STET
- Germany: Deutsche Bundesbank
- Greece: DIAS
- Hungary: GIRO Zrt.
- Italy: Banca d'Italia, Nexi and SIA
- Latvia: Latvijas Banka
- Netherlands/Germany/Italy: equensWorldline
- Macedonia: KIBS
- Moldova: National Bank of Moldova
- Poland: KIR
- Portugal: SIBS
- Romania: TransFonD
- Slovenia: Bankart
- Spain: Iberpay
- Sweden: Bankgirocentralen BGC AB
- Switzerland: SIX Interbank Clearing
- United Kingdom: Bacs Payment Schemes Limited and VocaLink
- 2 ACH's in Colombia: ACH-Colombia and CENIT
- India: National Automated Clearing House and National Electronic Funds Transfer
- Japan: Zengin
- Singapore: Singapore Automated Clearing House
- South Africa: BankservAfrica
Uses of the ACH payment system
- Credit Transfer
- Direct debit payment of consumer bills such as mortgages, loans, utilities, insurance premiums, rents, and any other regular payment
- Business-to-business payments, typically non-urgent
- Non-immediate transfer of funds between accounts at different financial institutions
- Clearing (finance)
- Clearing house (finance)
- Electronic funds transfer
- Pan-European automated clearing house
- Payment system
- Society for Worldwide Interbank Financial Telecommunication
- Wire transfer
- "European Automated Clearing House Association". www.eacha.org.