Automated Clearing House
Automated Clearing House (ACH) is an electronic funds transfer system in the United States that facilitates batch processing of financial transactions between banks and financial institutions. It handles various types of payments, including direct deposits, payroll, bill payments, and business-to-business transfers, operating through a network managed by Nacha (formerly the National Automated Clearing House Association). The system processes transactions in batches, typically with next-day settlement, making it a cost-effective and reliable method for recurring and high-volume payments.
Developers should learn about ACH when building financial applications, payment processing systems, or fintech platforms that require integration with U.S. banking infrastructure. It is essential for implementing features like direct deposit for payroll, automated bill payments, peer-to-peer transfers, and e-commerce transactions, as it offers lower transaction fees compared to credit card networks and supports high-volume, recurring payments efficiently. Understanding ACH is crucial for compliance with financial regulations and ensuring secure, reliable payment processing in applications targeting the U.S. market.