ACH stands for Automated Clearing House and is a centralized electronic funds transfer system that connects financial organizations nationwide. The ACH network is one of the most reliable payment systems in the world, handling a variety of recurring and one-time transactions between consumers and businesses. Billions of transactions are processed each year through the ACH network and it supports more than 20% of all electronic payments in the US.
ACH payments processed through the PaySimple system are processed using this secure, highly-reliable network. This same network is also used by federal bank and government institutions to securely transfer funds. The Federal Reserve acts as an ACH Operator through which banks transmit or receive ACH entries.
Put simply, the ACH network moves money from one bank account to another – electronically. Below is a detailed illustration showing what happens when your customers pay using ACH.
1. As the originator you would initiate a direct deposit or direct payment transaction through PaySimple using the ACH network.
2. The ODFI (Originating Depository Financial Institution) enters the ACH entry at the request of the originator and batches these entries to then send to an ACH operator at regular intervals.
3. ACH transactions are sorted and made available by the ACH operator to the RDFI (Receiving Depository Financial Institution).
4. Your customer's account, the receiver, is debited by the RDFI and funds are distributed to your bank.