What does ACH stand for in financial transactions?

ACH stands for Automated Clearing House, which refers to a network used for electronically moving money between bank accounts in the United States. This system facilitates various types of transactions, such as direct deposits, bill payments, and electronic funds transfers, making it an essential component of the payment processing landscape. The ACH network streamlines the transfer of funds, providing a secure and efficient means for individuals and organizations to manage their financial transactions without the need for physical checks or cash.

The correct understanding of ACH is crucial for anyone involved in financial operations or compensation management, as it directly relates to how payments are processed and cleared. This knowledge supports a deeper comprehension of electronic payments, which are increasingly important in today's digital economy.