How Does ACH Work?

ACH helps make processing customer checks as easy as taking a credit card (and at a fraction of the cost).

 This process has been made logistically slow on purpose to prevent fraud and error. Here's the great news. You will still receive customer payment more quickly than by paper check.

 The following chart shows a step-by-step breakdown of the authorization process for an electronic check transaction:

Event	Occurs	Special Notes
Transaction Created	Morning of Day 1	Customer can modify or cancel transaction until it is batched and submitted for authorization.
Transaction is Batched and Submitted to Fed Electronically for Authorization	Afternoon of Day 1	Once submitted, a transaction can no longer be modified or cancelled.
Customer-s Bank Authorizes (Clears) or Rejects (Returns) Transaction	Afternoon of Day 4	Banks can still reject a transaction even after it has been approved. This is called a Charge Back.

Who Governs EFT-s?

The central hub of Electronic Funds Transfer is the Automated Clearing House, commonly referred to as the ACH. The ACH securely directs and routes electronic payments to a merchants chosen bank destination.

The National Automated Clearing House Association or NACHA is responsible for the nation's electronic ACH payment system.

NACHA establishes rules and guidelines for the exchange of commercial electronic payments through the ACH network.

How Does an Electronically Processed Check Clear?

ACH Check Cycle :

1. Electronic Funds Transfers are often referred to as ACH's. They are the same.
   

2. For the Originator to execute the transfer of funds from your account to another account, the Originator must send the request through a bank.

3. A financial institution that transmits originated ACH transaction files to the ACH operator for clearing is called the Originating Depository Financial Institution or the ODFI.

4. The ACH operator then directs the electronic transfer to your bank.
   

5. Funds are electronically deducted from the customer-s bank account. Your bank is called the receiving Depository Financial Institution or the RDFI.

6. The Customer and Receiver authorize electronic funds transfers from their checking account to pay for the services you rendered.

7. Your bank, the RDFI, debits your bank account accordingly.

The cost of ACH processing depends on volume and frequency of transactions. Business type is also a factor that determines cost.

Our dedicated financial advisors are ready to help you. Contact us now to take advantage of our ACH processing.