What is ACH?
When you wake up on a Friday and see that your salary was automatically deposited to your bank account, that’s ACH.
When you pay a bill online and save the hassle of writing and mailing a check, or set your mortgage, car loan and other recurring payments to automatically pay on the day of the month you choose, that’s ACH.
Those are just some of the ways that tens of millions of Americans use ACH, or the Automated Clearing House Network. Whether you know it as Direct Deposit, direct pay or electronic check, ACH is at your service handling everything from Social Security and salaries to mortgage and credit card payments and more. Just set it and forget it—no more worrying about getting payments in on time.
In fact, in 2019 ACH moved 24.7 billion electronic payments, making the ACH Network one of the largest, safest and most reliable payment systems in the world.
What are the advantages of ACH? Take Direct Deposit via ACH as an example:
- Your hard-earned salary is in the bank on payday. There’s no need to pick up a check and take it to the bank (where they might even put a hold on the funds).
- Getting a tax refund? Even the IRS website says “the best and fastest way to get your tax refund is to have it electronically deposited for free.”
Paying bills is also easy with Direct Payment via ACH:
- From credit cards to mortgage payments to car insurance and more, direct payment ends the worrying about whether your check will arrive on time—or worse, get lost or stolen in the mail.
- Electronic payments pass through fewer hands than a paper check, making it a safer, more confidential way to do business.
How Direct Deposit Works
Direct Deposit is fast and reliable, and it’s the way 93% American workers get paid and it puts consumers in control of their finances. They can access their money quickly, pay no additional fees to receive their pay. In addition to payroll, Direct Deposit can be used to receive reimbursements, bonuses and more.
How Direct Payment Works
Direct Payment is the electronic transfer of funds to make payments – whether sending or receiving. Direct Payment allows consumers to pay their bills or tuition, donate to a favorite charity, make a purchase, or send money to a friend or family member electronically from a checking or savings account.
In 2019, the ACH Network processed 24.7 billion payments, marking the fifth consecutive year in which it added more than 1 billion new payments. Those include Direct Deposit via ACH of salaries, dividends and Social Security and other government benefits, and Direct Payment via ACH for bill payments including utilities and mortgages, as well as charitable giving, tuition, subscription services, and person-to-person (P2P) and business-to-business (B2B) payments. The total value of these payments exceeded $55.8 trillion.
In 1974 people carried dimes to make calls from payphones and copies were made on a mimeograph. A lot has changed, and so has Nacha and the ACH Network. The network continues to grow and provide greater services to consumers and businesses.
Network Administration Fees
One of the ways that financial institutions help sustain a healthy ACH Network is through Network Administration Fees.
Each depository financial institution that transmits or receives ACH entries is required to pay Nacha an Annual Fee and a Per-Entry Fee for costs associated with the administration of the ACH Network. The fee amounts are set to recover costs of the ACH Network administrative functions, which Nacha performs for the industry on an “at-cost” basis.
ACH Network Administration Fees provide a stable and predictable source of funds, from those parties that receive service benefits, for Network costs. The fee amounts are reviewed and approved by the Nacha Board of Directors annually and are amended as the Board deems necessary.
Purpose of ACH Network Administration Fees
Through the Annual Fee, all depository financial institutions that use the ACH Network equally contribute a minimum amount to maintain the Nacha Operating Rules. The Rules provide the legal and operational foundation for the ACH Network. Activities encompassed by the Nacha Rulemaking Process include the development and management of rule proposals, Requests for Comment, rule balloting, Rules interpretations and ACH Operations Bulletins, as well as Rules-related customer services and the administration of the Rules & Operations Committee and its subgroups.
Through the Per-Entry Fee, all depository financial institutions contribute proportionally based upon their use of the ACH Network. Per-Entry Fee proceeds are used to recover the costs of ACH Network activities associated with risk management, quality improvement, research and development of ACH applications and Rules, statistics, communications and advocacy, as well as the administration of national ACH messaging initiatives and the net costs of the Rules enforcement process. The Per-Entry Fee is applied to all commercial and government ACH entries transmitted or received by Participating DFIs, with the exception of “on-us” entries.
Administrative Fee Collection
The ACH Operators collect the Annual Fees and Per-Entry Fees on behalf of Nacha for entries sent from one depository financial institution to another through the ACH Operators.
Depository financial institutions are required to report, and Nacha collects directly, the Per-Entry Fees for ACH entries that are not sent through the ACH Operators but that are sent as part of direct send or “on-we” arrangements. A direct send or “on-we” arrangement is one in which a depository financial institution sends a payment file that uses the Nacha formats and/or is covered by the Nacha Operating Rules, where that file is not processed by an ACH Operator but instead is exchanged with another non-affiliated depository financial institution either directly or through another entity. This definition applies regardless of how interbank settlement is accomplished.
Depository financial institutions with direct send or “on-we” volume exceeding 5 million entries annually are obligated to file the requisite reporting with Nacha quarterly. Depository financial institutions with direct send volume below this threshold are obligated to file with Nacha annually. These financial institutions are required to submit transaction volume data and any associated fees directly to Nacha using form N-7 corresponding to that calendar year. Reporting requirements for direct send volume are included in Form N-7 in the Nacha Operating Rules.
Fee amounts for each year, published in the Schedule of Fees section of the Nacha Operating Rules, are based on the projected ACH Network administration costs as well as projected ACH volume. Any budgetary surplus or deficit that Nacha realizes from Network Administration Fees will be carried over when determining the following year’s “at-cost” fee amounts.
Download ACH Network Administration Fee Details:
ACH Network Administration Services
2020 Network Administrative Fee Schedule
2020 Form N-7 and Instructions
2019 Network Administrative Fee Schedule
2019 Form N-7 and Instructions
2018 Network Administrative Fee Schedule
2018 Form N-7 and Instructions
2017 Network Administrative Fee Schedule
2017 Form N-7 and Instructions