Automated Clearing House (ACH)

The term “automated clearing house” (or ACH) refers to an electronic clearing and settlement system for exchanging electronic credit and debit transactions among participating depository institutions; such electronic transactions are substitutes for paper checks and are typically used to make recurring payments such as payroll or loan payments. The Federal Reserve Banks operate an automated clearinghouse, as do some private-sector firms.

ACH transactions are available as a way to reload prepaid debit cards issued by many companies.

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