UPDATE: As of December 15th HowToPay now provides Instant ACH transaction approvals.. Our updated connection to the NACHA clearing house for instant approvals with our partners in the US has been completed and is now live. 

ACH, or Automated Clearing House, payments in the United States are a popular and widely used electronic funds transfer system that facilitates various types of financial transactions. Here's a description of ACH payments in the US:

1. Definition: ACH payments are a method of transferring funds electronically between different financial institutions in the United States. They are often used for a wide range of financial transactions, including direct deposits, bill payments, business-to-business payments, and more.
2. Processing: ACH payments are processed in near real-time. This means that transactions are accumulated throughout the day and then sent for processing in batches at specific intervals each hour, typically multiple times a day. This batch processing system is cost-effective and efficient.
3. Parties Involved: ACH payments involve three main parties:
   • Originator: The party that initiates the ACH transaction, which can be an individual or a business. Originators can initiate ACH payments for various purposes, such as paying bills or collecting payments from customers.
   • Receiving Depository Financial Institution (RDFI): The bank or financial institution where the recipient of the ACH payment holds an account. This institution receives the payment and credits it to the recipient's account.
   • Automated Clearing House Operator: The ACH network is governed by rules and regulations set forth by an ACH operator, such as The Clearing House (TCH) or the Federal Reserve. They facilitate the movement of funds between originators and RDFIs.
4. Types of ACH Transactions: ACH payments encompass various transaction types, including:
   • Direct Deposit: Used by employers to pay salaries and by government agencies for benefits like Social Security.
   • Direct Debit: Authorized withdrawals from a consumer's bank account, commonly used for recurring bills such as mortgage payments, utilities, and subscriptions.
   • Business-to-Business (B2B) Payments: Companies use ACH for vendor payments, tax payments, and other business-related transactions.
   • Person-to-Person (P2P) Payments: ACH is sometimes used for transferring funds between individuals.
5. Timing: ACH payment processing times can vary but generally take one business day to complete. Same-day ACH processing is also available for faster transfers for certain types of transactions.
6. Cost: The cost of ACH transactions varies depending on the financial institution and the type of transaction. Some ACH transfers may be free, while others may incur a nominal bank transfer fee depending on your bank.
7. Security: ACH payments are considered secure, and they are subject to strict regulations and security measures to protect both the originator and the recipient. These measures include encryption and authentication procedures.
8. Regulations: ACH payments are governed by the National Automated Clearing House Association (NACHA) rules and regulations, as well as federal laws and regulations, such as the Electronic Funds Transfer Act (EFTA) and the Regulation E.
9. Advantages: ACH payments offer several benefits, including reduced reliance on paper checks, cost savings, increased efficiency, and the convenience of electronic transactions.

Overall, ACH payments play a crucial role in the US financial system, providing a secure and efficient means of transferring funds between individuals, businesses, and financial institutions. They have become an integral part of modern financial transactions, streamlining the way money is moved and managed.

Accepting ACH Payments is much like receiving a paper cheque. Please see this important post in relation to Returns and Chargebacks: https://news.howtopay.com/news/achreturn

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