ACH payments are electronic payments. They’re created when the customer gives an originating institution, corporation, or other customer (originator) authorization to debit directly from the customer’s checking or savings account for the purpose of bill payment. Authorization must be in accord with the requirements of the ACH Operating Rules. It must be either written and signed, or electronically displayed.
ACH payments are an efficient and cost-effective alternative to paper checks and credit cards. On the Internet, ACH is primarily used for person-to-person (P2P), business-to-customer (B2C), and business-to-business (B2B) payments.
Common uses of ACH include:
- A customer pays a service provider
- An employer deposits money to an employee’s account
- A consumer moves funds from one bank to another
- A business pays a supplier for products
Benefits of ACH Payments
- Your customers get an alternative to credit cards and checks
- Lower-cost payment as compared to checks or credit cards
- Faster payments as compared to checks
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ACH Payment Processing
Based on the statistics released by NACHA, the Electronic Payments Association, ACH volume reached over 25 billion payments and $43 trillion in value in 2016, which was an increase of 5.3% over 2015 volume.
This is the 3rd consecutive year in which volume increased by a billion transactions or more over 2016. $43.7 trillion was transferred over the ACH network in 2016, accounting for an increase of 5.1% compared to 2015.
Same Day ACH was responsible for over 13 million credit transactions, making up about $17 billion. In 2016, the ACH network processed nearly 12 billion debit transactions, thus accounting for 58% of overall ACH network volume.
In addition to WEB credits, WEB debits, increased as well. In 2016, the ACH network transferred 4.6 billion WEB debits or online transactions, resulting in an increase of 12.7% over 2015. Together, WEB credits and WEB debits represent 23% of overall ACH network volume.