ACH (Automated Clearing House)
A batch-processing network for US electronic funds transfers that operates on a T+1 or T+2 settlement cycle.
Key Details
- ACH processes two types of transactions: Direct Deposits (credits) for payroll and vendor payments, and Direct Payments (debits) for bill pay and recurring charges
- Settlement typically takes 1-2 business days, though Same-Day ACH settles within hours for an additional fee
- ACH is governed by NACHA (National Automated Clearing House Association) rules and processes over 30 billion transactions annually
- Common reconciliation challenges include batch timing delays, return codes (R01-R85) that require exception handling, and matching individual transactions within batch settlements
- ACH competes with faster payment rails like RTP (Real-Time Payments) and FedNow, though ACH remains dominant for recurring and bulk payments due to lower cost