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Home Banking Articles How ACH Payments Work

How ACH Payments Work

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ACH payments are electronic payments made through the Automated Clearing House (ACH) Network. Using ACH payments can help reduce errors, speed things up, and save resources. Let’s cover the basics of ACH payments for businesses and consumers

Basics of ACH Payments

ACH payments are simply electronic transfers from one account to another. Common uses of ACH payments are:

  • A customer pays a service provider
  • An employer deposits money to an employee's account
  • A consumer moves funds from one bank to another
  • A business pays a supplier for products

Because they’re electronic, ACH payments use fewer resources (paper, ink, fuel to transport checks, etc). In addition, ACH payments make it easier to keep track of your finances. Instead of generic check information on a bank statement ("Check #3509 for $45.82" - what was that for?), you see the payee's name if you’ve used an ACH payment. Then it’s easier to categorize the transaction with your financial software.

ACH payments can be electronic from start-to-finish, or they can happen when a paper check is converted and processed electronically.

 

Why Businesses Like ACH Payments

Businesses benefit from ACH payments. There’s no need to wait for customers to write checks and have them lost in the mail. ACH payments are received more quickly and reliably, and there’s no need to forward checks to the bank and wait for processing.

 

Why Consumers Like ACH Payments

Consumers also benefit from ACH payments. There’s no need to write checks and get them into the mail on time. If using automatic ACH payments, they do not need to keep an eye out for bills - everything runs on autopilot for better or worse.

By Justin Pritchard / About.com

 

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