What is ACH Code?

ACH codes are widely used in banking procedures. An ACH Code stands for Automated Clearing House Code. It is a network used for electronic money transfers and electronic payments.

ACH is a method of clearing credit and debit payments, and is quite popular in the US. These payments are usually used for initiating and completing the payment for business-to-customer (B2C), business-to-business (B2B), and person-to-person (P2P) transactions.

ACH payment methods are used to pay various types of bills online, including payments for mortgages, bills, rentals, etc. These are created by the customer and given information about the bank and the savings/current account of the holder, through which the payment is to be made.

ACH payments are electronic payments or transfers which are created when the customer or the bank account holder gives the details of the originating institution or the name of the corporation, or another customer’s details and authorization to debit the said amount of funds directly from the customer's current/savings account for making a payment.

To complete the payment through ACH mode requires the customer to authorize the ACH Operating Rules, either written, signed or through any electronic mode, to complete their electronic transfer.

A person may see their ACH transfers in their bank account statement with the term 'ACH' mentioned against the amount of the transfer. A credit card’s ACH payment typically takes two-three days for clearing, and an ACH billing takes about three-five days to get completed.