What Is ACH Processing?
The ACH (Automated Clearing House) is a system that allows money to be transferred electronically to the company or individual’s deposit account. It is a form of e-payment. The communication network for the ACH processing uses the Federal Reserve Banking system to transfer money to and from your savings and checking accounts. A major number of banks in the US participate in the ACH processing network and are bound by certain rules and regulations.
Set up during the 1970’s, ACH processing is a solution for the large number of checks being processed on a regular basis. Initially, it was the large companies and major establishments who started using it but with the development of affordable new software, ACH processing became accessible to a broader spectrum in the business world. To route transactions it is, however, necessary that the selected software for the ACH processing network holds an agreement with some financial institution.
ACH processing allows businesses to collect recurring payments without waiting for a physical check. The transfer of funds is accomplished electronically once the customer authorizes the electronic debit. The ACH transactions are not processed immediately but take up to 2 to 3 days to be confirmed and validated.
There are two forms of e-payments by which money can be transferred:
- Wire transfer and
- Automated Clearing House (ACH Processing)
Designed to handle time-crucial payments and high-dollar between large banks, Wire transfer is an electronic payment system that allows payments to be processed electronically.
Unlike the wire transfer, ACH processing allows high volume payments to be processed hassle free and without any settlement issues, processing transactions within a couple of days. The ACH processing files received daily from member banks are sent to the clearing house and are later divided by the originating and the paying bank. The credits, deducts and accounts are then totaled and processed accordingly.
At Instabill.com, we provide merchant accounts with ACH processing. Our flexible software is not only easy to use and secure, but it also gives a safe access to ACH processing. The transactions you make with ACH processing are cheaper and less expensive than the ones you make by using credit cards.