What Is ACH Payment Processing?
The Automated Clearing House (ACH) creates an electronic relationship with all of the banks in the nation, facilitating the automated flow of money from consumers to businesses, from businesses to businesses and from businesses to consumers. ACH goes into action once a payment is scheduled whether it is a one-time payment or a regularly occurring payment.
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Function
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ACH payment processing occurs when funds are moved from the origination account to the destination account electronically and automatically. The entire process involves ACH debits (taking the money from the origination account) and ACH transfers (verifying the funds and delivering it to the destination account).
Features
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ACH payments are initiated by either the payee or the payer and occur when the funds are delivered to the destination bank account after being verified. An ACH payment can be a purchase, a bill payment or even a rental authorization, no matter how the payment was originally initiated--via a traditional bank, a vendor's physical location, at an ATM, on a vendor's website or through the use of a debit or credit card.
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Development
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Initially, ACH payment processing occurred electronically between traditional banking institutions. However, with the emergence of Internet technology, ACH payment processing now includes non-traditional online banking institutions, such as Paypal.
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References
- Photo Credit Paying Bills image by ne_fall_photos from Fotolia.com
