Essentials Of ACH Check ProcessingPayments against checks through use of ACH check processing has become the norm today not only in the US, but also in most other parts of the world. ACH stands for automated clearing house. ACH is a network that uses electronic check conversion to effect secure and fast payments against paper checks issued by individuals, financial institutions, businesses, and government organizations. ACH check processing allows the savings or current bank account of an individual or company to be debited or credited with funds electronically. The ACH network has participation by at least 98% of the savings banks, credit unions, and financial institutions in the US and Canada. Electronic check payment processing through the ACH network makes for better cash management and reduced check processing cost than is possible with traditional manual check processing. ACH check processing helps provide banks details of check payment that they can use directly without any effort to display on account statements provided to their customers. Such details may include the individual's name, account number, transaction amount, and its effective date. Further, a detailed record of each transaction can also be forwarded by the clearing house. Detailed records may include shipping advice or invoice number. ACH check processing transactions involve the following. An individual or a company (known as the Receiver) provides authorization to an individual/company (known as the Originator) to begin a transaction to their financial institution account. The Originator then collects information about the transactions of its customers or employees that need to be automated and forwards it to an Originating Depository Financial Institution (ODFI). The ODFI collects from participating companies the ACH transactions and presents the information after consolidation to the ACH Operator. The ACH operator then processes the transaction files received from the ODFI and distributes them to the Receiving Depository Financial Institution (RDFI). It receives entries for the accounts of its customers and it posts entries as to the date of settlement of the transactions. It also posts the transactions on the statement of accounts of its customers. ACH check processing is regulated by the US National Automated Clearing House Association (NACHA). It provides guidelines and rules for the efficient operation of the ACH network and oversees it through its subsidiary network of 36 regional ACH associations. An important feature of ACH check processing relates to the combination of a check processing machine and check processing software used to read and identify/recognize the magnetic ink character recognition (MICR) code that is printed on any check. It helps the ACH check processing equipment to know the branch of the bank on which the check has been drawn. This helps in automated segregating the various transactions based on the branch of a bank. ACH check processing is such an automated process that the requirement of human resources to manually process the transactions is largely reduced. It also helps reduce the transaction time. Check Payment Processing Contact Privacy Policy Legal Disclaimer |