ACH = AUTOMATIC CLEARING HOUSE
Automated Clearing House (ACH) payments are an electronic funds transfer from one bank account to another. ACH payments have been around for over forty years and were developed with the intention of being faster, safer, and more efficient than the use of paper checks to transfer funds. Many businesses and government entities have long used ACH payments to direct deposit paychecks, for instance, and they have also gained popularity among individuals as a way to pay taxes and recurring bills. Setting up ACH payments is normally a fairly simple process. That said, it is helpful to understand how they work, the variations and risks involved, and the basics of setting up ACH payments either through your intended payee or your financial institution.