Ach Processing - A Secure And Efficient Financial Framework
ACH Processing is a means through which financial transactions take place in the United States
. Some of the transactions that happen under this umbrella are electronic payments, direct deposits, debit card payments, insurance premiums and mortgage payments. It is also used in the business industry for payments between businesses and for some governmental transactions. The acronym stands for automatic clearing house. In its simplest terms, it can be thought of as connection system for banks. It is a way for funds to go from point A to point B in a safe, effective and efficient manner.
ACH processing began in the seventies. It was developed as a way to process payments other than through typical check writing. A group of heavy hitters in the financial arena came together to serve as its clearing house. Some of these organizations included, and continue to include, the Federal Reserve, the American Clearing House Association and Visa. The Federal Reserve is the member that serves as the primary transaction facilitator. An evolution has occurred since its inception. What was once simply an alternative to check writing now processes billions of dollars worth of electronic transactions.
Entities that deal with this amount of money need oversight. ACH processing is regulated by an organization called NACHA-The Electronic Payments Association. There are eight primary functions of the organization. They serve as a rule making body for the electronic payment system. They deal with risk management including identifying developing issues and trouble shooting. They undertake quality control initiatives. They work with developing new applications for the system. They deal with member and government relations and develop educational programs. They also take care of marketing.
ACH processing allows institutions to offer several advantageous services to their customers. They are able to take checks by phone or via a website giving customers an additional payment option. It also allows for credit card processing. Businesses that are unable to do credit card transactions are at a great disadvantage. A majority of customers prefer the safety and convenience of making payments this way. Recurrent payments are also possible. Again, convenience is the name of the game. Payment plans or subscriptions can be securely established when using this type of system. This is a reliable system that allows funds to move electronically and securely. Organizations that can make use of this framework can reap the benefits of ease of use, efficiency and security in a variety of their transactions.
by: Troy Truman
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