View source for Finance:Automated clearing house

{{Short description|Type of electronic network for financial transactions}}
{{Banking |transfer}} 
An '''automated clearing house''' ('''ACH''') is a computer-based electronic network for processing transactions,<ref name=RGTechIndia>{{cite web | author=Dr. B.S. Sawant |title=Technological Developments in Indian Banking Sector |url=https://www.researchgate.net/publication/261009679 |website=www.researchgate.net| access-date=20 November 2018}}</ref> usually domestic low value payments, between participating [[Finance:Financial institution|financial institution]]s. It may support both [[Finance:Wire transfer|credit transfer]]s and [[Finance:Direct debit|direct debit]]s.<ref name=ECBPMglossary>{{cite web |author=European Central Bank |title=Payments and markets glossary |url=https://www.bankingsupervision.europa.eu/home/glossary/html/act7a.en.html |website=www.bankingsupervision.europa.eu |access-date=19 November 2018}}</ref><ref name=ECBPCSglossary>{{cite web |author=European Central Bank|title=GLOSSARY OF TERMS RELATED TO PAYMENT, CLEARING AND SETTLEMENT SYSTEMS |url=https://www.ecb.europa.eu/pub/pdf/other/glossaryrelatedtopaymentclearingandsettlementsystemsen.pdf |website=www.ecb.europa.eu |access-date=19 November 2018}}</ref> The ACH system is designed to process batches of payments containing numerous transactions, and it charges fees low enough to encourage its use for low value payments.

==History==
The first automated clearing house was [[Organization:BACS|BACS]] in the United Kingdom, which started processing payments in April 1968.<ref>{{cite web |url=https://www.bacs.co.uk/NewsCentre/PressReleases/Pages/HalfACenturyOfBacsPaymentsHouseholdNameMarksMajorMilestone.aspx |archive-url=https://web.archive.org/web/20200618065734/https://www.bacs.co.uk/NewsCentre/PressReleases/Pages/HalfACenturyOfBacsPaymentsHouseholdNameMarksMajorMilestone.aspx |url-status=dead |archive-date=June 18, 2020 |title=Half a Century of Bacs Payments |publisher=Bacs |date=April 17, 2018 }}</ref>

In the U.S. in the late 1960s, a group of banks in California sought a replacement for [[Finance:Cheque|check]] payments.<ref name=FRBPhistory>{{cite web |author=James McAndrews |title=The Automated Clearinghouse System: Moving Toward Electronic Payment |url=https://www.philadelphiafed.org/-/media/frbp/assets/economy/articles/business-review/1994/brja94jm.pdf |website=www.philadelphiafed.org}}</ref> This led to the first automated clearing house in the US in 1972, operated by the Federal Reserve Bank of San Francisco.<ref name=FRBPhistory /> 

BACS operated from the beginning on a [[Finance:Net settlement|net settlement]] basis. Netting ACH transactions reduces the amount of deposits a bank must hold.<ref name=FRBPhistory />

==Operation==
ACHs process large volumes of credit and debit transactions in batches. ACH [[Finance:Wire transfer|credit transfer]]s are initiated by the payer and include payments such as: direct deposits, payrolls, retail payments and vendor payments.<ref name=FRBPhistory /> ACH [[Finance:Direct debit|direct debit]] collections are initiated by the payee with pre-authorization from the payer; ACH direct debits include consumer payments such as utility bills, insurance premiums, mortgage loans, and other types of bills.<ref name=FRBPhistory /> Transactions received by the bank during the day are stored and transmitted in batches to the ACH. ACHs are net settlement systems, so settlement may be delayed for days, and there is some settlement risk. ACHs may allow for the transfer of a limited amount of additional information along with payment instructions.

ACH payments contrast with [[Finance:Real-time gross settlement|real-time gross settlement]] (RTGS) payments which are processed immediately by the central RTGS system and not subject to any waiting period on a one-to-one basis. ACH systems are typically used for low-value, non-urgent transactions while RTGS systems are typically used for high-value, urgent transactions.<ref name=PCqualitative>{{cite web |author=Michael Tompkins |author2=Ariel Olivares |title=Clearing and Settlement Systems from Around the World: A Qualitative Analysis |url=https://www.payments.ca/sites/default/files/2016-qualitative-analysis.pdf |website=www.payments.ca |access-date=19 November 2018}}</ref>

===Operations===
This section describes in a generic way the typical operation of an ACH system. Each ACH system has its own specifics; see, for example, quick facts<ref name=NACHAwhatisACH>{{cite web |title=What is ACH?: Quick Facts About the Automated Clearing House (ACH) Network |url=https://www.nacha.org/news/what-ach-quick-facts-about-automated-clearing-house-ach-network |website=www.nacha.org}}</ref><ref name=CBprimer>{{cite web |title=ACH Payments: A primer for subscription businesses |url=https://www.chargebee.com/blog/ach-payments-explained/ |website=www.chargebee.com|date=22 December 2015 }}</ref> for the [[Organization:NACHA|Nacha]] [[Finance:ACH Network|ACH Network]] in the {{wipe|United States}} and its terminology. 
# The ordering customer makes a transaction initiation, which can be either manually or by sending a file of initiation requests to a bank.
# The bank gathers all transaction initiations for an ACH that arrive from different customers (combining manual and file-based).
# On a periodic basis, the bank creates a file that it dispatches to the ACH either at the end of day or in cycles throughout the day.
# The ACH operator combines the information submitted by the banks within each cycle (generally ACHs have several cycles throughout the day).
# The ACH operator informs each bank of the net settlement amount for which they are responsible for the cycle.
# The ACH operator ensures that the settlement amounts are received from all participants for the cycle, so that the cycle can be executed.
# The ACH operator informs the destinator's bank of the transaction details.
# When transaction arrives in the destination bank, the bank executes the transaction: such as crediting the payment to the beneficiary, while the ordering customer's bank debits the ordering customer's account.

==Existing systems==
There are various ACH systems around the world. The [[Organization:World Bank|World Bank]] identified 87 systems in their 2010 survey<ref name=IBRDGPSS2010>{{cite web |author=The International Bank for Reconstruction and Development / The World Bank |title=PAYMENT SYSTEMS WORLDWIDE A SNAPSHOT Outcomes of the Global Payment Systems Survey 2010 |url=http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/282044-1323805522895/121534_text_corrections_5-7.pdf |website=www.worldbank.org|access-date=19 November 2018}}</ref> and 98 systems in their 2012 survey,<ref name=IBRDGPSS2012>{{cite journal |author=The International Bank for Reconstruction and Development / The World Bank |title=Global Payment Systems Survey (GPSS) |url=http://pubdocs.worldbank.org/pubdocs/publicdoc/2016/2/860781456436620612/GPSS2012-Section-III-Retail-Payments.xlsx |website=www.worldbank.org|date=5 May 2013 |pages=1–9 |access-date=19 November 2018}}</ref> while other sources have made qualitative analysis of a smaller number of ACH systems.<ref name=PCqualitative />

{| class="wikitable sortable"
!Country!!System
|-
| {{flag|Albania}}
| AECH<ref name=AECH>{{cite web |title=AECH - Albanian Electronic Clearing House |url=https://www.bankofalbania.org/Payments/AECH-Albanian_Electronic_Clearing_House/|website=www.bankofalbania.org}}</ref>
|-
| {{flag|Argentina}}
| COELSA (Compensadora Electrónica)<ref name=COELSA >{{cite web |title=Cash and Treasury Management Country Report: Argentina|url=https://www.afponline.org/docs/default-source/default-document-library/pdf/19-01-30-afp-updated-country-report-argentina.pdf?sfvrsn=0 |website=www.afponline.org |access-date=1 March 2019}}</ref>
|-
| {{flag|Australia}}
| Bulk Electronic Clearing System (BECS)
|-
| {{flag|Austria}}
| Payment Services Austria GmbH (PSA)<ref name=GSANews >{{cite web |title=GeldService Austria |url=https://www.geldservice.at/userfiles/NEWS_18112011_EN(2).pdf |archive-url=https://web.archive.org/web/20181120221138/https://www.geldservice.at/userfiles/NEWS_18112011_EN(2).pdf |url-status=dead |archive-date=November 20, 2018 |website=www.geldservice.at }}</ref>
|-
| {{flag|Azerbaijan}}
| Xırda Ödənişlər üzrə Hesablaşma Klirinq Sistemi (XÖHKS) / Low Value Payments Clearing and Settlement System <ref name=cbar >{{cite web |title=Low Value Payments Clearing and Settlement System |url=https://www.cbar.az/page-478/low-value-payments-clearing-and-settlement-system?language=en |website=www.cbar.az | access-date=24 January 2024 }}</ref>
|-
| {{flag|Bahamas}}
| Bahamas Automated Clearing House (BACH)<ref name=BACH>{{cite web |title=ACH to unveil personal money transfers in early 2012 |url=https://thenassauguardian.com/2011/12/23/ach-to-unveil-personal-money-transfers-in-early-2012/ |archive-url=https://web.archive.org/web/20181218193519/https://thenassauguardian.com/2011/12/23/ach-to-unveil-personal-money-transfers-in-early-2012/ |url-status=dead |archive-date=December 18, 2018 }}</ref>
|-
| {{flag|Bangladesh}}
| Bangladesh Automated Clearing House (BACH)<ref name=BACHdescription>{{cite web |title=Bangladesh Automated Clearing House (BACH) |url=https://www.bb.org.bd/fnansys/paymentsys/bach.php |website=www.bb.org.bd |access-date=19 November 2018}}</ref>
|-
| {{flag|Belgium}}
| Centre for Exchange and Clearing<ref name=CECdescription>{{cite web |title=Centre for Exchange and Clearing |url=https://www.cecbelgium.be/en|website=www.cecbelgium.be}}</ref> (CEC)
|-
| {{flag|Brazil}}
| CIP-SILOC<ref name=CIPSILOC>{{cite web |title=Cash and Treasury Management Country Report: Brazil|url=https://www.afponline.org/docs/default-source/default-document-library/pdf/19-01-30-afp-updated-country-report-brazil.pdf?sfvrsn=0 |website=www.afponline.org |access-date=1 March 2019}}</ref>
|-
| {{flag|Bulgaria}}
| [https://www.borica.bg/en/products-and-services/Regulirani-uslugi BISERA]<ref name=BISERA>{{cite web |title=REGULATED AND PAYMENT SERVICES | url= https://www.borica.bg/en/products-and-services/Regulirani-uslugi |website=www.borica.bg |access-date=11 February 2022}}</ref>
|-
| {{flag|Canada}}
| Retail System, known formally as the Automated Clearing Settlement System (ACSS), run by [[Finance:Payments Canada|Payments Canada]]
|-
| {{flag|Cayman Islands}}
| Cayman Islands Automated Clearing House<ref name=CaymanACHnews>{{cite news |author=Spencer Fordin |title=Six Cayman retail banks install automated clearing house | url=https://www.caymancompass.com/2018/05/01/six-cayman-retail-banks-install-automated-clearing-house/ |work=Cayman Compass |access-date=19 November 2018}}</ref>
|-
| {{flag|Chile}}
| Centro de Compensación Automatizado (CCA)<ref name=CCAChile>{{cite web |title=Cash and Treasury Management Country Report: Chile|url=https://www.afponline.org/docs/default-source/default-document-library/pdf/18-12-18-afp-updated-country-report-chile5199464e827d6df1bc1fff00003724d4.pdf?sfvrsn=0 |website=www.afponline.org |access-date=1 March 2019}}</ref>
|-
| {{flag|China}}
| China National Advanced Payment System (CNAPS) Bulk Electronic Payment System (BEPS)<ref name=CNAPS>{{cite web |title=Payment, clearing and settlement systems in China|url=https://www.bis.org/cpmi/publ/d105_cn.pdf |website=www.bis.org |access-date=5 February 2019}}</ref>
|-
| {{flag|Colombia}}
| ACH-Colombia and <br>[https://www.banrep.gov.co/es/contenidos/page/introducci-n-2 CENIT]
|-
| {{flag|Costa Rica}} 
| SINPE ({{lang-es|Sistema Nacional de Pagos Electrónicos}}; National System of Electronic Payments)<ref>{{cite web |title=National System of Electronic Payments |url=https://www.bccr.fi.cr/en/payments-system/general-information |website=www.bccr.fi.cr |access-date=30 May 2022}}</ref>
|-
| {{flag|Croatia}}
| Financial Agency (FINA)
|-
| {{flag|Czech Republic}}
| CERTIS (Czech Express Real Time Interbank Gross Settlement System)
|-
| {{flag|Denmark}}
| Eurogiro and <br>Nets Group
|-
| {{flag|Egypt}}
| EG-ACH<ref name=EGACHdescription>{{cite web |title=EG-ACH |url=http://www.egyptianbanks.com/services/egach.aspx |website=www.egyptianbanks.com |access-date=19 November 2018 |archive-date=19 November 2018 |archive-url=https://web.archive.org/web/20181119150143/http://www.egyptianbanks.com/services/egach.aspx |url-status=dead }}</ref>
|-
| {{flag|Ethiopia}}
| EthSwitch<ref>{{Cite web|date=2016-09-15|title=How BPC and EthSwitch are interconnecting Ethiopian banks|url=https://www.intelligentcio.com/africa/2016/09/15/how-bpc-and-ethswitch-are-interconnecting-ethiopian-banks/|access-date=2020-10-08|website=Intelligent CIO Africa|language=en-GB}}</ref>
|-
| {{flag|Europe}}
| [[Finance:Pan-European automated clearing house|Pan-European automated clearing house]] for the [[Organization:Single Euro Payments Area|Single Euro Payments Area]], STEP2
|-
| {{flag|France}}
| STET-CORE
|-
| {{flag|Germany}}
| Deutsche Bundesbank
|-
| {{flag|Greece}}
| DIAS Interbanking Systems
|-
| {{flag|Hungary}}
| InterGIRO2 GIRO Zrt<ref>{{cite web |title=GIRO - Services - Interbank Clearing System |url=https://www.giro.hu/services/interbank-clearing-system |website=www.giro.hu |access-date=23 February 2021 |archive-date=15 April 2021 |archive-url=https://web.archive.org/web/20210415015056/https://www.giro.hu/services/interbank-clearing-system |url-status=dead }}</ref>
|-
| {{flag|Hong Kong}}
| Hong Kong Interbank Clearing Limited<ref name=HKICL>{{cite web |title=HKICL Electronic Clearing|url=https://www.hkicl.com.hk/eng/our_services/bulk_clearing_services/electronic_clearing.php |website=www.hkicl.com.hk |access-date=5 December 2018}}</ref>
|-
|{{ISL}}
|Reiknistofa Bankanna (RB)
|-
| {{flag|India}}
| [[Finance:National Automated Clearing House|National Automated Clearing House]] and <br>[[Finance:National Electronic Funds Transfer|National Electronic Funds Transfer]]
|-
| {{flag|Iran}}
| PAYA system (''Paayaa'', پایا)<ref name=CBI-PAYA>{{cite web |title=Paya |url=https://www.cbi.ir/page/16100.aspx |website=www.cbi.ir |access-date=2020-01-27 |archive-date=2021-05-27 |archive-url=https://web.archive.org/web/20210527015004/https://www.cbi.ir/page/16100.aspx |url-status=dead }}</ref><ref name=CBI-Systems>{{cite web |title=Payment & Clearance Systems |url=https://www.cbi.ir/page/15746.aspx |website=www.cbi.ir |access-date=2020-01-27 |archive-date=2021-04-27 |archive-url=https://web.archive.org/web/20210427084210/https://www.cbi.ir/page/15746.aspx |url-status=dead }}</ref>
|-
| {{flag|Israel}}
| Masav<ref name=Masav>{{cite web |title=The Banks' Clearing House |url=https://www.boi.org.il/en/PaymentSystem/ActiveClearingHousesInIsrael/Pages/ClearingHouse.aspx |website=www.boi.org.il }}</ref><ref name=IsraelSys>{{cite web |title=Israel's Payment and Settlement Systems |url=https://www.boi.org.il/en/PaymentSystem/Documents/redb2013e.pdf |website=www.boi.org.il }}</ref>
|-
| {{flag|Italy}}
| Banca d'Italia, <br>[[Company:Nexi|Nexi]] and <br>[[Company:SIA S.p.A.|SIA]]
|-
| {{flag|Japan}}
| Zengin (banking)
|-
| {{flag|Latvia}}
| Latvijas Banka
|-
| {{flag|Mexico}}
| SICAM (Sistema de Camaras)<ref name="ct report mex">{{cite web |title=Cash and Treasury Management Country Report: Mexico|url=https://www.afponline.org/docs/default-source/default-document-library/pdf/19-01-30-afp-updated-country-report-mexico.pdf?sfvrsn=0 |website=www.afponline.org |access-date=1 March 2019}}</ref>
|-
| {{flag|Morocco}}
| GSIMT (The Moroccan Interbank Remote Clearing System)<ref name="Moroc gsimt">{{cite web |title=GSIMT - Groupement pour un Système Interbancaire Marocain de Télécompensation |url= https://www.gsimt.ma/en/historical |website=www.gsimt.ma |access-date=12 May 2022}}</ref>
|-
| {{flag|Moldova}}
| National Bank of Moldova
|-
| {{flag|Netherlands}}/{{flag|Germany}}/{{flag|Italy}}
| equensWorldline
|-
| {{flag|Nigeria}}
| Nigeria Automated Clearing System (NACS)
|-
| {{flag|Norway}}
| Norwegian Interbank Clearing System (NICS)<ref name=NICS>{{cite web |title=NICS |url=https://www.bits.no/en/nics/ |website=www.bits.no |access-date=16 March 2021}}</ref>
|-
| {{flag|Pakistan}}
| National Institutional Facilitation Technologies (NIFT) ACH<ref name=NIFT>{{cite web |title=About Automated Clearing |url=https://www.nift.pk/automated-clearing/about-automated-clearing/ |website=www.nift.pk |access-date=5 December 2018 |archive-date=23 May 2020 |archive-url=https://web.archive.org/web/20200523082743/https://www.nift.pk/automated-clearing/about-automated-clearing/ |url-status=dead }}</ref>
|-
| {{flag|Philippines}}
| PesoNet
|-
| {{flag|Poland}}
| {{ill|Krajowa Izba Rozliczeniowa|pl}} (KIR)
|-
| {{flag|Portugal}}
| Sociedade Interbancária de Serviços (SIBS)
|-
| {{flag|Peru}}
| Camara de Compensacion Electronica (CCE)
|-
| {{flag|Republic of Macedonia}}
| Clearing House KIBS AD Skopje (KIBS)
|-
| {{flag|Romania}}
| TransFonD SENT ACH<ref name=TRANSFOND>{{cite web |title=Automated Clearing House - SENT |url=https://www.transfond.ro/en/services/automated-clearing-house-sent |website=www.transfond.ro |access-date=19 March 2019}}</ref> 
|-
| {{flag|Saudi Arabia}}
| SARIE<ref name=SARIE>{{Cite web |url=http://www.sama.gov.sa/en-US/PaymentSystem/Pages/SARIE.aspx |title=The Saudi Arabian Riyal Interbank Express (SARIE) |access-date=2019-03-07 |archive-date=2020-08-11 |archive-url=https://web.archive.org/web/20200811125455/http://www.sama.gov.sa/en-US/PaymentSystem/Pages/SARIE.aspx |url-status=dead }}</ref> with both [[Finance:Real-time gross settlement|RTGS]] and ACH
|-
| {{flag|Singapore}}
| eGIRO<ref name=EGIRO>{{cite web |title=Singapore Consumer Banking |url=https://abs.org.sg/consumer-banking/giro |website=abs.org.sg |access-date=18 February 2019}}</ref> which is part of Singapore Automated Clearing House<ref name=SGACHdescription>{{cite web |title=Singapore Automated Clearing House |url=http://www.mas.gov.sg/Singapore-Financial-Centre/Payment-and-Settlement-Systems/Clearing-and-Settlement-Systems/Singapore-Automated-Clearing-House.aspx |archive-url=https://web.archive.org/web/20130522062543/http://www.mas.gov.sg/singapore-financial-centre/payment-and-settlement-systems/clearing-and-settlement-systems/singapore-automated-clearing-house.aspx |url-status=dead |archive-date=May 22, 2013 |website=www.mas.gov.sg |access-date=19 November 2018 }}</ref> 
|-
| {{flag|Slovenia}}
| Bankart
|-
| {{flag|South Africa}}
| [[Company:BankservAfrica|BankservAfrica]]
|-
| {{flag|South Korea}}
| HOFINET<ref name=HOFINET>{{cite web |title=Electronic Payment |url=https://www.kftc.or.kr/kftcEn/business/EgovEnFinInfo.do |publisher= Korea Financial Telecommunications and Clearings Institute |access-date=4 January 2024}}</ref> operated by Korea Financial Telecommunications & Clearings Institute<ref name=InterbankSharedNetwork>{{cite web |title=Payment and Settlement Systems in Korea |url=https://www.bok.or.kr/eng/main/contents.do?menuNo=400045 |publisher= Bank of Korea |access-date=3 January 2024}}</ref>
|-
| {{flag|Spain}}
| Iberpay
|-
| {{flag|Sweden}}
| [[Finance:Bankgirot|Bankgirocentralen BGC AB]]
|-
| {{flag|Switzerland}}
| Swiss Interbank Clearing
|-
| {{flag|Taiwan}}
| Taiwan Clearing House
|-
|{{Flag|Ukraine}}
|National Bank of Ukraine's System of Electronic Payments<ref name=UkraineSEP>{{cite web |title=System of Electronic Payments |url=https://bank.gov.ua/en/payments/sep |website=bank.gov.ua}}</ref>
|-
| {{flag|United Kingdom}}
| [[Organization:BACS|Bacs Payment Schemes Limited]]
|-
| {{flag|United States}}
| [[Finance:Federal Reserve Bank|Federal Reserve Bank]]'s [[FedACH]] and <br> The Clearing House's [[Electronic Payments Network]], underpinned by [[Organization:NACHA|Nacha]]'s [[Finance:ACH Network|ACH Network]]
|-
| {{flag|Venezuela}}
| Cámera de Compensación Electrónica (CCE)<ref name=CCEVenezuela>{{cite web |title=Cash and Treasury Management Country Report: Venezuela|url=https://www.afponline.org/docs/default-source/default-document-library/pdf/18-12-18-afp-updated-country-report-venezuela.pdf?sfvrsn=0 |website=www.afponline.org |access-date=1 March 2019}}</ref>
|-
| {{flag|Vietnam}}
| NAPAS 247, run by National Payment Corporation of Vietnam (NAPAS)<ref name=NAPAS>{{cite web |title=National Payment Corporation of Vietnam (NAPAS)|url=https://hongtien.vn/what-is-the-napas-card-national-payment-services-features-of-napas-card/?lang=en |website=hongtien.vn |access-date=28 March 2023}}</ref> 
|}

In addition, there are various ACH associations such as the European Automated Clearing House Association.<ref name=EACHAmembers>{{cite web |title=European Automated Clearing House Association |url=http://www.eacha.org/members.php |website=www.eacha.org}}</ref>

==Uses of the ACH payment system==
There are various usages of ACH systems;<ref name=NACHAwhatisACH /> the terminology related to different types of transactions varying in different countries. Most ACH payment systems support the following types:
* [[Finance:Wire transfer|Credit transfer]]: non-immediate transfer of funds between accounts at different financial institutions for payments by [[Finance:Retail banking|retail]] customers and non-urgent [[Business-to-business|business-to-business]] payments. 
* [[Finance:Direct debit|Direct debit]] payment of consumer bills such as mortgages, loans, utilities, insurance premiums, rents, and any other regular or membership style payment. These type of payments are usually used by businesses that collect ongoing payments from the same customer.{{cn|date=October 2020}}

==See also==
* [[Finance:Clearing|Clearing]]
* [[Finance:Clearing house|Clearing house]]
* [[Finance:Electronic funds transfer|Electronic funds transfer]]
* [[Finance:Pan-European automated clearing house|Pan-European automated clearing house]]
* [[Finance:Payment system|Payment system]]
* [[Organization:Society for Worldwide Interbank Financial Telecommunication|Society for Worldwide Interbank Financial Telecommunication]]
* [[Finance:Wire transfer|Wire transfer]]

==References==
{{Reflist}}

[[Category:Payment networks]]

[[Category:Electronic funds transfer]]
[[Category:Banking terms]]
[[Category:Payment clearing systems]]

{{Sourceattribution|Automated clearing house}}