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All About ACH Transaction: Definition, Processing, Fees

Comments Off on All About ACH Transaction: Definition, Processing, Fees 26 July 2011

The Automated Clearing House, (ACH), is a system of financial establishments that conduct a substantial amount transactions in the United States. These ACH transactions are performed in an electronic format and are a very trustworthy way to move money between individuals, companies and financial institutions. In 2009, there were 18.76 billion ACH transactions that accounted for tens of trillions of dollars.

Nowadays, ACH transactions are really important to our economy. They make e-commerce possible and provide cashless options. This makes them one of the most secure and most secure ways to transfer funds.

Listed here are ACH transaction forms:

-Direct deposits -Debit card purchases -Automated online bill payments -Business-to-business payments (B2B) -E-commerce payments

ACH Transaction Processing

The transaction process begins when the receiver authorizes the originator to issue a purchase. This can be, for instance, a debit or credit transaction and the originator might be a retail store, an employer, a utility company or even a regular person just like you or me.

Next, an Originating Depository Financial Institution, or ODFI, which is a bank or any other traditional bank, acts for the originator and enters the financial transaction into the ACH network. The ODFI then sends the originators transaction data to the operator.

The operator then sends the ACH purchase to the correct Receiving Depository Financial Institution, or RDFI. This RDFI acts for the receiver, which might be a major organization or even an individual, to issue a debit or credit on the receiver’s account. And, consequently, the ACH transaction process is complete.

ACH Transaction Fees

The ruling body of the Automated Clearing House is the National Automated Clearing House Association, (NACHA). NACHA charges a fee for every transaction an ACH operator makes along with an additional annual fee. At present, NACHA charges $.000133 per ACH transaction as well as an annual fee of $144.

The fees were put in place to help fund upgrades to the ACH network. Right now, the ACH transaction fees support NACHA’s ACH network administration services, including:

-ACH network risk management applications -ACH network top quality innovations -Maintenance and enforcement of the NACHA operating policies -Development of principles for first time ACH applicants -ACH network communications, research and statistics -Administration of the National ACH marketing campaign

Ever since the transaction fees were set up in 2008, they have gradually rose. On the other hand, they’re small in comparison to the amount of money that ACH operators are able to move each year. There isn’t any doubt that the future of the ACH network will only carry on growing as more and more people are converting to electronic programs to handle their transactions.

If you want to find out more about ACH transactions, follow the link to this site dedicated to explaining theACH Network.. This article, All About ACH Transaction: Definition, Processing, Fees is available for free reprint.

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