What defines Direct Payment in the ACH Network?

Direct Payment in the ACH Network is characterized by a standing authorization to debit the debtor’s account. This means that the payer provides consent in advance for future transactions, allowing recurring payments to be made automatically. This is especially useful for businesses that offer subscription services, regular bill payments, or any scenario where a consistent payment amount is expected, as it streamlines the process and enhances convenience for both parties involved.

In this context, having a standing authorization ensures that the transactions comply with the requirements set forth by the National Automated Clearing House Association (NACHA), which oversees the ACH Network, and that the debtor has agreed to the payment arrangement. This distinguishes Direct Payment from other types of transactions that may only occur once, do not require authorization, or are restricted to specific transaction sizes or types.