What is ACH – The Importance of Automated Clearing House?
Saturday, 09 January 2021

What is ACH? Automated Clearing House (ACH) happens to be a secure digital network. It is used by various financial institutions, such as banks, for electronic transfer of funds. This network is used for processing debit-card payments, electronic payments and network direct deposits. As small transactions as 8% is made by using the ACH network.

These are related to the government, including federal, state and local, and comprise of social security payments. The remaining happens to be commercial transactions, with just a part associated to credit. 2/3 of this is associated to debits. Check payments are also processed by banks over the network. At times, Electronic Funds Transfer (EFT) is the name used to refer to this network.

What Makes ACH Processing Important?

What is ACH processing important for? ACH processing was developed by the Federal Government in 1974 with the aim of developing an electronic network for using financial transactions. The primary objective and intent for the development of ACH was to process debit and credit in many volumes in many branches. Businesses as well as customers can use ACH in different manner, such as for:
• Direct funds deposit to agents or employees
• Paying for mortgages
• Consumer payment processing
In case information about your account gets passed over the network, it can be kept secure and safe with the help of highly advanced technology that is being improved continuously. With more and more payments being made with smartphones, iPads and other mobile devices, technologies like encryption software and card swipers need to be kept up as well.

What are the Benefits of ACH Processing?

What is ACH processing benefit? ACH processing has major advantages over processing of credit cards for businesses that may deal with the waiting time. These can help with:
• Business improvement - Let businesses make payments more flexible, boost sales and enhance the flow of business money
• 0% transaction fee – A 0% transaction fee is what most of the ACH processing merchants pay, which is opposed to credit card processing.
• Direct credit or debit – Recurring billing automation lets businesses directly credit or debit in the bank accounts of employees or customers automatically on a preferred schedule.
Customers appreciate having this is an extra or main option for payments. Research, in fact, reveals that accepting Automated Clearing House as a payment option is able to boost sales more than 20%. Information such as account numbers, financial institution routing and account holder name are used to transmit ACH transactions.
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