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Rise Glossary

What is an Automated Clearing House (ACH)?

An Automated Clearing House (ACH) is an electronic network for financial transactions in the United States. It facilitates the exchange of electronic transactions between financial institutions, such as direct deposit of payroll, electronic payments for bills, and other types of financial transactions.

ACH transactions are processed in batches, typically at the end of each day, rather than in real-time. This means that funds may not be available immediately, but are typically available by the next business day.

The ACH network is operated by the National Automated Clearing House Association (NACHA) and is governed by the rules and regulations of the Federal Reserve and the Electronic Funds Transfer Act (EFTA). It is widely used for a variety of financial transactions, including direct deposit of payroll, electronic bill payments, and electronic payments for government benefits.

It is considered a more secure and efficient way to process payments than paper-based methods like checks, and it allows for more automation and less human error.