PAYMENT GLOSSARY

ACH/Automated Clearing House

ACH is short for Automated Clearing House. When you send money from one bank account to another, you can do it through bank wire or ACH. Think of ACH as an electronic payment from one bank account to another. The transaction is initiated by a business to debit an account by submitting an ACH file. This file contains the bank’s ABA (American Bankers Association®) number and the account number(s) to debit, along with the amount(s). This file is submitted for processing nightly and passes through networks controlled by the Federal Reserve. ACH payments are not guaranteed; that is, they must clear, much like a check. ACH is useful as an alternative to accepting a credit card.

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