ACH, or Automated Clearing House, is the technology that processes electronic financial transactions between all banking and financial institutions throughout the U.S. and is governed by Nacha. Within the network, ACH payments are composed of two electronic payment types: ACH debit (e.g., bill payments) and ACH credit (e.g., direct deposits such as refunds, government benefits and more).
These payments originated in the late ‘60s as a response to bankers’ concerns that previous technology wouldn’t be able to keep pace with the volume of paper checks being processed. Eventually, the network was developed to more efficiently process paper checks using the account and routing numbers. By 2001, ACH payments had expanded to the internet (WEB) and phone (TEL), enabling consumers and businesses to pay bills and make other payments electronically.