In 1974 people carried dimes to make calls from payphones and copies were made on a mimeograph.
A lot has changed, and so has ACH. The network continues to grow and provide greater services to consumers and businesses. But first, a look at how it began.
The real roots go back to 1968, when a group of California bankers became concerned about the growing volume of paper checks. They feared it could outpace the technology and equipment used to clear those checks. So they formed the Special Committee on Paperless Entries, or SCOPE.
Around the same time, the American Bankers Association sponsored a study looking at ways of improving the nation’s payment system.
These events led to the 1972 formation of the first ACH association in California to handle electronic payments. Other regional ACH networks soon appeared and in 1974 they formed Nacha to administer the ACH Network.
As administrator, Nacha sets and enforces the rules for ACH and educates people about the network. What it doesn’t do is operate the physical network. That’s up to the ACH Operators: the Federal Reserve and The Clearing House. They do the actual processing and routing of transactions—“moving the money,” if you will.
Nacha’s establishment led to the first national ACH rules being drafted, and that in turn paved the way for the very first standard ACH format for Direct Deposit. The U.S. Air Force soon became the first employer in the nation to initiate a Direct Deposit payroll program. Today, Direct Deposit is so popular that it’s the way nearly 93 percent of Americans get paid.
The Social Security Administration began testing Direct Deposit in 1975. We’ll never know if those pioneers expected to see that today 99 percent of SSA’s payments are made by Direct Deposit, thanks in no small part to several celebrity endorsements you may remember such as this one by actress Rita Moreno:
While government payments gave ACH a big starting boost, other uses have developed over the years.
Ever write a check and wonder why you never saw it canceled? It was electronically converted, a process the ACH Network enabled nearly 20 years ago. Innovative at the time, today virtually no one ever receives back a canceled check, regardless of how it was processed.
And in 2001, ACH payments initiated on the internet and by phone became available, providing Americans with ways to pay bills and make other payments electronically without writing checks.
Nacha continues moving the ACH Network forward to meet ever-growing needs. One of the biggest undertakings has been implementing Same Day ACH. Its benefits are many, including quicker payments of insurance claims for consumers and the ability for businesses to make emergency payrolls and faster expense payments.
September 23, 2016, saw the debut of Same Day ACH for credits, which quickly proved to be a hit. In October 2016 there were 3.8 million payments totaling $4.98 billion.
Phase two of Same Day ACH arrived in September 2017, allowing debits, which enabled the same-day processing of virtually any ACH payment. This enhancement was also a success. In October 2017 there were 4.2 million debits with a value of more than $3 billion. Credits had grown by then to 5.8 million payments totaling more than $6 billion.
In 2018 there were nearly 178 million Same Day ACH payments, valued at almost $160 billion.
And more enhancements are coming to Same Day ACH. Next up: In September 2019, availability of funds for both Same Day and traditional ACH may occur earlier in the day. In March 2020 the Same Day ACH dollar limit per transaction will increase from $25,000 to $100,000. And March 2021 will bring a two hour extension to the time that Same Day ACH payments can be submitted to the ACH Network.
Another major step for the ACH Network was the federally mandated healthcare EFT standard, which took effect in 2014 and was enable by the Nacha Rules. It requires all health plans to pay healthcare providers by a standardized ACH payment at the provider’s request. In 2018, more than 306.7 million ACH electronic funds transfer (EFT) payments, valued at $1.59 trillion, were made from health plans to healthcare providers, a growth of more than 100 percent since its inception in 2014.
The Supplementing Fraud Detection Standards for WEB Debits rule (effective March 19, 2021) is neutral regarding specific methods or technologies used to validate first-use consumer account information. Possibilities include:
An ACH prenotification
ACH micro-transaction verification…
Myth 1: If payday is on a Friday, you won’t get your money until Monday (or later if Monday is a holiday)
Fact: If payday is Friday, payroll payments made by Direct Deposit are available in the employees’ account at the opening of business on Friday in virtually all cases. For example, if your…
Threats and fraud can be perpetuated through cyberattacks, email compromise, account takeover, social engineering, and even vendor impersonation fraud. While these threats are not about a direct compromise of the ACH Network or other payment systems, they exploit vulnerabilities or gaps in…