What is the Automated Clearing House (ACH)?
Definition and Overview
The Automated Clearing House, commonly known as ACH, is a U.S.-based electronic network that facilitates the transfer of funds between financial institutions. It provides a cost-effective, efficient, and secure way to move money digitally without the need for paper checks.
More Details on ACH Transactions
ACH eliminates the delays and errors associated with paper checks by processing electronic payments directly between bank accounts. Unlike checks, which require physical handling, deposits, and clearance times, ACH transfers move funds electronically from one account to another almost instantly. This significantly accelerates payment processing and reduces administrative burdens.
Common ACH transactions include transfers made via popular digital wallets like PayPal and Venmo. Businesses often use ACH for direct deposit of employee paychecks, while consumers may rely on ACH for automated bill payments such as mortgages or utilities.
Who Oversees the ACH Network?
The ACH network is managed by NACHA, the National Automated Clearing House Association, a nonprofit organization responsible for overseeing the system’s rules and operations.
Using ACH in a Sentence“Beyond uses ACH transfers to securely withdraw payroll funds from client accounts, manage payroll tax withholding, and pay employees directly.”
Related Terms
- Bi-weekly pay period
- Payroll tax withholding
- NACHA (National Automated Clearing House Association)
- Pay period
- Payroll administrator
- Employer Identification Number (EIN)
Helpful Articles and Resources
- Setting up direct deposit for your team
- Essential guide to payroll tax withholding
- Understanding gross pay vs. net pay
- ACH or wire transfer: choosing the right payment option for your business
If you want, I can also help with setting up ACH payments in Beyond or assist with FAQs about ACH transfers!