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ACH Payment &
DepositThe Automated Clearing House
(ACH) is the nation's largest electronic payment
system.
Today the ACH is used by more than 20,000 financial institutions, over 4
million corporations, and one hundred thirty-five million
consumers. ACH payments offer a wide range of applications for
consumers, companies, and financial institutions. These
include Direct Deposit, Direct Payment, check conversion, web
payments, and re-presentment of returned NSF checks.
A consumer's look at the flow of a
typical ACH transaction and a description of the payment system
participants follows:
Originator
You authorize this company to deposit or
withdraw a payment from your account on a pre-determined date. This
could be your employer in the case of a Direct Deposit or a billing
company that you pay regularly in the case of Direct
Payment.
Originating Depository Financial
Institution (ODFI)
The financial institution that the
Originator banks with, who introduces the transaction into the ACH
payment system.
ACH Operator
The central clearing facility (much like a
train switching yard) that takes the payment instruction from the ODFIs
and sends it to the RDFI.
Receiving Depository Financial Institution
(RDFI)
Your bank or credit union who receives the
withdrawal or deposit and posts it to your account.
Receiver
You. The withdrawal or deposit is posted to
your account at your financial institution.
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Although it may feel like these transactions are being
'touched' in the process, they are not. ACH payments move
electronically from start to finish, making them safer, more secure
and reliable.
For information on Direct Deposit or Direct Payment visit www.electronicpayments.org.
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