![]() CCD - Cash Concentration or Disbursement is used when ACH entries are made from a business instead of a consumerīefore we describe how ACH payments work, let’s understand the parties involved.PPD - Prearranged Payment and Deposit Entries are used for recurring or single entry authorization by consumers, usually related to a contract or for pre-authorized bill payments.TEL - Telephone Initiated Entry is used when payment is taken over the phone.WEB - Internet Initiated Entry is used when payment is made online.The primary use cases for businesses with customer records on file for recurring payments are: In all cases, customers must provide permission for the debit to occur, either in writing, online or verbally. Some are used for one-time payments and others for recurring payments. There are more than a dozen types of ACH debit categories, officially identified by Standard Entry Class (SEC) codes, each representing specific use cases. your cable bill) where ACH Ddebit is used by the payee to automatically debit the consumer’s bank account. The most common use is for recurring or subscription payments that follow an agreed upon payment schedule (i.e. ![]() ACH debit funds are pulled from a bank account when payment is due.Payers securely input banking details and any necessary credentials or reference information. The most common use is when consumers set up online bill pay through their bank and use ACH credit for one-off bills or payments. ACH credit funds are pushed to a bank account, such as when a customer chooses to send funds to a payee, whether that’s a government agency, school, medical practice or business.There are two primary methods of ACH transfers associated with direct payments, defined by whether money is pushed or pulled into a bank account: ACH direct payment is the primary focus of this article. Examples include making purchases, paying bills or tuition, and donating to a favorite charity. Direct deposits also encompass reimbursements, tax refunds, stimulus checks and payouts (like employee tips or gig worker payments).ĭirect payment is used for the movement of funds to make or receive payments, whether by individuals, businesses, or organizations. In fact, 96% of American workers are paid via this method because they receive their funds quickly and pay no fees. There are two primary categories of ACH: direct deposit and direct payment.ĭirect deposit is the fastest and most reliable method for an employer or the government to pay an employee or constituent. For businesses with recurring payments, the savings really add up. They are faster and more reliable than paper checks and they cost less to process than payments made by credit and debit cards or wire transfers. ACH payments are also commonly used for businesses with customers on recurring payment plans or subscription services that prefer to pay via bank account withdrawals instead of credit cards.īusiness owners-especially those that know their customers-like the convenience of ACH payments. Think of ACH as an “electronic check” or “e-check.” It is typically used for paycheck deposits, paying bills and invoices, utility payments, mortgages and tax payments. The most common types of ACH payments are between consumers, government agencies, businesses, and employers/employees. ![]() What is an ACH Payment?ĪCH payments are quite common, and chances are that you use them in your personal and business settings. The physical network that processes transactions is run by the ACH Operators, notably, the Federal Reserve and The Clearing House.Īccording to Nacha, more than 29 billion ACH Network payments were made in 2021, valued at close to $73 trillion. It is managed by Nacha, the organization that sets and enforces the Rules for ACH. ACH stands for Automated Clearing House and the ACH network of financial institutions is responsible for the movement of funds. ACH payment processing is the banking industry’s definition of moving money between bank accounts in the United States. ![]()
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