What is an Automated Clearing House?

An Automated Clearing House (ACH) is an electronic network for financial transactions. It is generally used in the U.S. This clearing house usually processes large batched volumes of credit and debit orders. The first task done by the ACH is when a receiver grants the authorization for the originator to issue a debit or credit to an account. The receiver can be also known as the account holder,

Automated Clearing House

The originator can be a specific individual person, a company or a merchant. Every account is identified by the bank account number and the bank’s routing number. The vital step of this payment process is the authorization of the receiver/account holder – a transaction may not be initiated without prior consent.