A direct deposit refers to ACH payments made from businesses or the US government to consumers.There are two distinct categories of ACH transactions: direct deposits and direct payments. What is an ACH transaction? Examples of ACH payments Figure 2: The dollar value of ACH payments by type | Source: NACHA This is because B2B payments tend to be much bigger than consumer payments. In fact, although B2B ACH payment volume (the number of payments made) on the ACH network is much lower than that of consumer payments, B2B ACH payments represent the biggest share of actual dollars flowing through the network (72.34% in 2022). Figure 1: The number of business-to-business payments using ACH | Source: NACHA The share of B2B payments made through the Automated Clearing House network grew 11.80% year-over-year in 2022, totaling 5.94 billion payments with a collective value of $52.53 trillion. This payment method is less ubiquitous for B2B transactions, although it’s continuing to grow in popularity. If you live in the US and pay your electricity bill, rent, or car insurance through a pre-authorized debit, you’re more than likely using ACH. Other countries like Canada have their own payment clearing systems for domestic payments. International ACH transfers-payments between a US financial institution and an agency outside the US-are possible but not frequent due to the ease of wire payments for this purpose. The ACH network is managed by the National Automated Clearing House Association, Nacha, a non-profit that operates under the Federal Reserve. It’s a transfer of funds between accounts at two different banks. How to collect ACH payments with VersapayĪCH payment meaning: what is an ACH payment?Īn ACH payment is an electronic funds transfer made over the Automated Clearing House network, which connects all the banks in the United States.The benefits of ACH payments for customers and sellers.In this guide, we’ll explain what ACH payments are, how ACH payments work, the benefits of ACH payments for customers-and for sellers-so you can determine if it makes sense for your business to accept them, and more. NACHA-the National Automated Clearing House Association and the governing body responsible for these transfers-defines the ACH network as a group of processing systems that financial institutions-like banks-use to combine ACH transactions for processing.ĪCH payments are growing in popularity in business-to-business (B2B) circles, owing to their low cost and high convenience. They are electronic money transfers between banks that are processed through the ACH network. Automated Clearing House (ACH) payments are a digital payment method.
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