Automated Clearing House (ACH)

The ACH network processes large batches of payments, rather than handling each payment individually in real time. It is governed by rules set by Nacha, an industry organisation, and operated by the Federal Reserve and a private operator.

Common ACH payments include employers paying wages directly into employees' accounts, consumers paying bills automatically, businesses paying suppliers, government benefits and tax refunds, and person-to-person transfers through banking apps.

For example, a company might pay its 500 employees by sending a single ACH file to its bank, which distributes the wages to each employee's account.

ACH payments are low-cost and reliable, but traditionally took one or two business days to settle. Same-day ACH is now widely available. ACH is similar to bank payment systems in other countries, such as Bacs in the United Kingdom and the Single Euro Payments Area credit transfer and direct debit schemes in Europe. Real-time payment systems are increasingly used where instant transfers are needed.