Definition

Automated Clearing House (ACH)

Automated Clearing House (ACH) is a secure payment transfer system that connects all U.S. financial institutions. The ACH network acts as the central clearing facility for all Electronic Fund Transfer (EFT) transactions that occur nationwide, representing a crucial link in the national banking system. It is here that payments linger in something akin to a holding pattern while awaiting clearance for their final banking destination. Scores of financial institutions transmit or receive ACH entries through ACH operators such as the American Clearing House Association, the Federal Reserve, the Electronic Payments Network, and Visa.

In 1998, the network processed nearly 5.3 billion ACH transactions with a total value of more than $16 trillion.

This was last updated in September 2005
Posted by: Margaret Rouse

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