Advantages of using an automated clearing house network

Nyi Mas Dhyandra Nur Annisa, 2401989770

Some of the advantages of using an automated clearinghouse network  (ACH)  include:

Customer’s point of view

• No need to write a check. Only by using a payment application or online banking system  (online bank system), customers can initiate a warning through their mobile phone just by pressing a button once. Scheduling ACH payments even makes the process easier.
• Payments can be processed and received quickly through online banking (online bank system)  or files directly (real time).
• Customers can schedule payments within the same day or schedule payments for future dates.
• Less paper means more environmentally friendly, customers can directly receive salaries directly deposited into their respective bank accounts or receive money through a digital wallet

The point of view of the company or businessman

• Speed, when the customer uses a check it will take a long time to process and enter the company’s account.

ACH can significantly reduce the time it takes to process a payment. In addition,  ACH  transactions may carry information on various accounts or invoices associated with each payment.

Then how can this ACH transfer work? ACH transfer works based on a batch processing system (one set processing system)  instead of a real-time processing system. This means that banks and other financial companies receive and store customer requests for a full day and then send them electronically as batches to other financial companies. ACH transfer stages include:

• A person or business or other entity initiates payments through the ACH
• Information from the ACH transfer is then sent by the bank to the clearing facility company.
• ACH transfer data is then sorted, and given access to the bank by the clearing facility company which is then indicated as the recipient of the ACH transfer.
• The receiving institution (bank) then debits or credits the account of a person or business or other entity detailed in each ACH transfer.

References

Lake, R. (2017). How do ACH payments and ACH networks work?

McAndrews, J. (1994). The Automated Clearinghouse System: Moving Toward Electronic Payment.

Silitschanu, P. (n.d.). Automated Clearing House (ACH) Transfers: How Do They Work?