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What is the ACH Network ?

ACH NETWORK – Funds transfer system governed by the rules of the National Automated Clearing House Association, which provides for the interbank clearing of electronic entries for participating financial institutions.


Each year, the Automated Clearing House Network (ACH) moves more than $43 trillion between bank accounts throughout the United States1 reliably and inexpensively. Virtually every U.S. citizen and business uses the ACH Network for direct deposit of payroll, automated payments, income tax refunds, and other purposes. Yet, there are many things you may not know about the ACH Network. Here are a few that can help your business get the most benefit from it.

  1. ACH credits are not final in the same way as wires, but almost. A payor can attempt to reverse a payment made with an ACH credit only if the payor claims the beneficiary was already paid by a previous ACH credit entry, or the beneficiary was the wrong recipient of the funds, or the original ACH payment was in the wrong amount. Otherwise, the credit is considered final.
  2. ACH rules give you three chances to collect. When you initiate a debit to a customer’s account for a payment, and the debit is returned for insufficient or uncollected funds, the debit can be reinitiated up to two times. You have up to 180 days after the settlement date of the original entry to reinitiate it. Checks returned for insufficient or uncollected funds may be converted to ACH debits and represented for collection up to two more times.
  3. To avoid fines, respond to NOCs. A notification of change (NOC) informs the originating depository financial institution (ODFI) that the routing number or bank account number in an ACH transaction is incorrect. If you initiated the transaction, the ODFI should then notify you.1 The next time you send a transaction to that same beneficiary, you must use corrected information. Non-response to NOCs is the #1 ACH rules violation and cause of fines. Ask your bank if it can help you comply with NOCs.
  4. Unauthorized debits can be disputed beyond the return time frame. ACH rules state that unauthorized debits to corporate accounts must be returned by midnight of the second banking day following the effective date of the original entry. However, an ODFI warrants that all ACH transactions it originates are authorized. If someone sends an ACH debit you have not authorized to your business or corporate account, the ODFI has breached its warranty, and you can dispute the transaction even after the return deadline has passed. But sooner is always better.
  5. Same Day ACH processing is now availableDomestic transactions under $25,000 now qualify for Same Day processing, with funds available by 5 p.m. local time. Same Day ACH credits and debits are perfect for time-sensitive payments like just-in-time inventory or emergency payroll, or simply to enhance your customer and supplier relationships. Once you enroll with your bank, use the current date as the effective date in the batch header record of your payment file, and transmit your file by the Same Day processing deadline.
  6. SEPA is Europe’s answer to the ACH Network. The Single Euro Payment Area (SEPA) standardizes the legal framework, settlement time frame, formatting, and costs of non-urgent electronic payments made in euros throughout Europe. U.S. companies that have a bank account in a SEPA country can make and receive SEPA ACH-type payments to other accounts in any one of the 34 SEPA countries.

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