NACHA

• The ACH system is governed by an organization known as NACHA. NACHA is an acronym that stands for the National Automated Clearing House Association. They are an organization that develops rules and required practices for businesses and banks that plan on using this technology. Banks who use this type of credit all adhere to the same standards set forth by NACHA so that there is some consistency in transactions from one banking institution to the next.
  
  

Batch Processing

• The ACH credit involves a batch process that is used by banks. When a bank receives an electronic payment for one of its customers throughout the day, the payment is not actually processed until the end of the business day. This allows the bank to receive multiple payments throughout the day and then process them all at once, which can save a considerable amount of time when compared to processing each payment separately.
  
  

Ways ACH is Used

• The ACH system is used for a variety of purposes. Anytime an electronic payment is made, this system is likely used. For example, when employers pay their employees through automatic deposit into their bank account, the ACH system is used. When consumers use online bill pay systems to pay their bills, this system is utilized. When automatic payments are set up on a recurring basis with utility companies or other creditors, this is the system that is used.
  
  

Safety

• One of the primary reasons that the ACH system is used is because of the safety that it provides. With this system, the payments can be verified by the financial institution before they are processed. No physical money has to change hands, but the money is instead sent directly to the bank account of the party receiving the payment. If an error is made, the transaction can also be reversed and no harm will be done.