Automated Clearing House Network

In the late 1960s bankers in California, UNITED STATES suggested an idea of an electronic system that later formed the Special Committee On Paperless Entries  (SCOPE). In 1974, the American bankers’ association formed the National Automated Clearing House Association  (NACHA), essentially NACHA.   Finally, in 1978,  the national network operated by the Federal Reserve Bank of San Francisco was able to operate properly.

ACH itself means a computer-based electronic system that connects banks between banks in order to transfer funds between accounts at different banks. The ACH system is made to make small and repetitive transactions such as salaries, mortgage instalments, insurance premiums, electricity bills, and so on. Repetitive payments match the work of ACH because they allow one-time costs for the installation of authorization for payments to spread to all types of transactions. ACH is designed like this, like a check, ACH transactions can be returned, for example, when funds are not available / funds are lacking in the account.

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?