The financial world is filled with abbreviations and acronyms, and if you’re not used to seeing it every day it can be a little confusing. A common acronym that may appear on your bank or credit union statement is ACH. ACH stands for Automated Clearing House, and is an electronic bank-to-bank money transfer that processes direct deposit and direct payment transactions a few times every day.
Deposits vs Payments
With ACH direct deposits, you’re receiving money directly into your account. This can include payments from your employer, like paychecks or reimbursed expenses, or the government, like tax refunds.
ACH direct payments you are sending money directly from your account to an organization, business, or individual. If you have a recurring bill, such as mortgage or a utility, that you pay with your bank account, then it is processed through ACH. If you send a friend or family member money through a person to person payment app like Zelle or Venmo, then you are conducting an ACH transaction.
This video from Vizo Financial goes in depth about the ACH process.
