ACH Network

Definition
The ACH Network is "a batch processing, store-and-forward system."

Overview
Transactions received by the financial institution during the day are stored and processed later in a batch mode. Rather than sending each payment separately, ACH transactions are accumulated and sorted by destination for transmission during a predetermined time period. This provides significant economies of scale. It also provides faster processing than paper checks, which must be physically handled. Instead of using paper to carry necessary transaction information, ACH transactions are transmitted electronically between financial institutions through data transmission.

Typically, five participants are involved in an ACH transaction:


 * (a) the originating company or individual (Originator),
 * (b) the Originating Depository Financial Institution (ODFI),
 * (c) the ACH Operator,
 * (d) the Receiving Depository Financial Institution (RDFI), and
 * (e) the receiving company, employee or customer (Receiver).