ACH / Automated Clearing House

Merchant Glossary: ACH / Automated Clearing House

ACH is short for Automated Clearing House. When you send and receive money from one bank account to another, you can do it through bank wire, which happens very quickly the same day, or ACH, which takes a couple days. 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 all the ABA numbers and account numbers to debit, along with the amounts. This file is submitted for processing nightly and passes through networks controlled by the Federal Reserve. ACH payments are not guaranteed, that is, they may bounce and they must clear much like a check does. ACH is useful as an alternative or in addition to accepting credit cards.