Tuesday, 10:00 AM ET - The processor works in conjunction with X’s bank (the ODFI) to submit a file to the ACH network. Monday, 4:00 PM ET - Company X submits its payroll info to a processing partner. Today, roughly 94% of American workers receive their pay via the ACH network. The ODFI is the financial institution that places the ACH request, while the RDFI is the financial institution accepting the request.ĪCH transfers were created to overcome the hassles of the paper check, offering an easy and inexpensive way to move money with just a few pieces of information (name, bank account number, and bank routing number). The ACH works with both sides of the transaction to ensure the secure transfer of funds and maintains the integrity of the system by enforcing regulations governing ACH transfers. This nationwide network processes and clears ACH transfers between participating financial institutions. There are three main entities involved in an ACH transfer-the ACH Operator (either FedACH or the Electronic Payments Network), the Originating Depository Financial Institution (ODFI), and the Receiving Depository Financial Institution (RDFI).Ībove those entities, the Automated Clearing House acts as the central authority that facilitates ACH transfers. This is the type of ACH transfer used for payroll or government benefit programs (often referred to as “direct deposits”). ACH credits are requests to “push” money from the requestor’s account. ACH debits are requests for the ACH network to 'pull' money from an account that the requestor doesn't control, such as an auto-bill payment.Ģ. There are two kinds of ACH money transfers:ġ. This includes everything from person-to-person transfers and bill payments to direct deposits.Ĭommon uses of ACH bank transfers include: An ACH transfer is an electronic transfer of funds from one bank account to another over the ACH (Automated Clearing House) network.

Ach debit or credit