Automated clearing house (ACH)

An automated clearing house (ACH) is an electronic network that makes it possible for banks to move money between their accounts. ACH transfers occur directly between bank accounts, without any need for paper checks or other payment forms.

ACH transfers are used for direct deposit of payroll and pension payments, monthly bills, consumer payments, and business-to-business payments.

There are three types of ACH transactions: 

• Direct deposit is a payment method where money is electronically deposited into your bank account. This can be done through an employer or financial institution. If employees receive a paycheck via direct deposit, it will likely come from the employer's bank account rather than their own personal one. 
• Direct debit allows you to pay bills electronically by giving the merchant access to your bank account for the amount owed on a monthly basis (like if you pay rent online). 
• Credit transfers let people transfer money from one person's account to another without using cash or checks—this is often how friends settle debts with each other (e.g., if someone owes you $50 after going out together).

According to the automated clearing house meaning, ACH transfers occur directly between bank accounts. They are electronic and instantaneous, meaning they're faster than paper checks and not subject to fraud or theft. ACH transfers also cost less than writing checks, which means you save money by using them for your businesses' recurring payments. And because ACH transfers are processed through a secure network operated by the Federal Reserve Bank, they're safer than sending cash via overnight mail or handing off an envelope full of cash at an airport security checkpoint.