Automated Clearinghouse Operations

The automated clearinghouse (ACH) is a nationwide mechanism that processes electronically originated batches of credit and debit transfers. ACH credit transfers include direct deposit of payroll, social security benefits, and tax refunds, as well as payments to contractors and vendors. ACH debit transfers include direct debits of consumer and business accounts for the payment of mortgages, bills, and tax obligations. The ACH network can also be used to convert check payments into debit transfers. By providing the appropriate disclosures, businesses can use account information on checks to initiate ACH debit transfers and reduce payment processing costs.

There are currently two automated clearinghouse operators--the Federal Reserve Banks and Electronic Payment Network (EPN). These operators provide similar services to the depository institutions they serve and rely on each other to process interoperator ACH transactions--that is, transactions in which the originating depository financial institution and the receiving depository financial institution are served by different operators. Interoperator transactions are settled by the Reserve Banks.

Private-sector ACH transactions: Facts and statistics (on the web site of NACHA)

Further information on the FedACH service