What does ACH stand for?

ACH stands for Automated Clearing House. This term is widely recognized in the financial industry as a network used for electronic money transfers and various forms of electronic payments, including direct deposits and bill payments. The Automated Clearing House serves as a system that facilitates the movement of funds between bank accounts through a batch processing system, which means it processes transactions in groups rather than individually in real time.

The significance of the ACH lies in its efficiency and cost-effectiveness in handling large volumes of transactions, making it a foundational component of the U.S. payment system. It provides a secure method for electronic transactions, allowing businesses and individuals to transfer money digitally rather than using paper checks. Understanding the role of the Automated Clearing House is essential for navigating the landscape of electronic payments and faster payment systems.