Automated Clearing House (ACH) Definition

Automated Clearing House (ACH) Explained:

What is Automated Clearing House? Automated Clearing House, or ACH, is a massive financial network that processes interbank transactions in the U.S. Examples of ACH transfers include employee direct deposit, business-to-business fund transfers, and consumer payments made directly from a bank account. In the merchant services industry, some providers offer ACH as an option for accepting customer payments, usually for recurring billing or internet transactions. Many merchant account providers also collect their monthly processing fees via a direct ACH transfer from a merchant’s bank account. Merchants should be aware that although ACH payments usually come with lower processing costs, they do not include guaranteed funds or real-time authorization, meaning the transaction can be processed regardless of whether the customer has funds available in his or her account.


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