Automated clearing house
electronic network for financial transactions
An automated clearing house (ACH) is a computer-based electronic network for processing transactions, usually domestic low-value payments, between participating financial institutions. It may support both credit transfers and direct debits. The ACH system is designed to process batches of payments containing numerous transactions, and it charges fees low enough to encourage its use for low-value payments.
History
The first automated clearing house was BACS in the United Kingdom, which started processing payments in April 1968. BACS operated from the beginning on a net settlement basis. Netting ACH transactions reduces the amount of deposits a bank must hold.
In the U.S. in the late 1960s, a group of banks in California sought a replacement for check payments. This led to the first automated clearing house in the US in 1972, operated by the Federal Reserve Bank of San Francisco.
Operation
ACHs process large volumes of credit and debit transactions in batches. ACH credit transfers are initiated by the payer and include payments such as: direct deposits, payrolls, retail payments and vendor payments.
The public source identifies “Automated clearing house” as electronic network for financial transactions. This brief keeps that definition visible, then builds a research path around Automated, clearing and house.
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Vocabulary and entity names are the principal evidence signals here, because they determine the precision of every later search. The source revision retrieved here is dated Aug 25, 2026. The linked authority identifier is Q1975834. None of the 0 selected statements returned an explicit reference. The first chronological checks are 1968 and 1972.
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This entry incorporates text from “Automated clearing house” on English Wikipedia. Contributors are listed in the page history. Text is available under the Creative Commons Attribution-ShareAlike 4.0 License. Selected authority identifiers and statements are retrieved from Wikidata under CC0; their references and qualifiers remain part of the verification path.