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What is Automated Clearing House (ACH)?

Automated Clearing House (ACH) is a network used to send or receive funds electronically from one place to another through National Automated Clearing House Association (since 1974) NACHA. In the United States, any company can use it for financial services, including payroll, direct deposit, tax refunds, consumer bills, tax payments, and many others. Through this system in place, the efficiency and timely processing of the transactions have taken its effect.

ACH vs. Electronic Funds Transfer vs. Direct Deposit

Automated Clearing House (ACH), Electronic Funds Transfer (EFT), and Direct Deposit are types of electronic transfer.

Automated Clearing House (ACH) is run by the organization called Nacha (In the past known as NACHA - National Automated Clearing House Association) which is used in the United States to transfer money between the bank accounts.

Electronic Funds Transfer (EFT)can be used to transfer money between the same or different banks via an online network. There are several ways like phone payments, ATM transactions, internet transactions, ACH, and Direct Deposit to transfer funds by the EFT method.

Direct Deposit is a fully automated method in which funds are transferred electronically from one bank account to another bank account without any physical involvement i:e no paper checks and no need to visit the bank for either party involved.

Related: Payroll, Payroll Software. Payroll Service.