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Taking ACH Automated Clearing House Payments Online

ACH or Automated Clearing House is an electric check fund transfer from one bank or credit union (Originator) to another (Receiver).

One example of ACH payments is payroll.  The funds come from the employer's bank (Originator) account directly to the employees (Receiver), so that no checks have to be written, and the employee doesn't have to go out of their way to cash or deposit the paycheck.

Bill paying is another convenience using ACH. For example, if you have your water bill, electric bill, cable bill, phone bill and etcetera, that is an ACH transaction.  The money came directly from your checking account to the company's account.

When you go to pay a lot of times online for your insurance payment or renewing your vehicles registration at the DMV, at checkout, you will give you the option to pay with a credit card or check.  If you pick credit card, it will warn you that you get a cash discount for using a check to avoid fees, in which you have to add your banks name, routing number and checking account number.  Once the information is entered, the money goes directly from your bank to their bank without having to use a paper check.

While this does sounds like a wire transfer, there are some differences. ACH payments may in some cases take a little longer for the funds to clear to the receiver's account.  However, taking ACH is a very small to no fee for the transaction, where as a bank charges a fee, and you have to go the bank and wait for a personal banker to assist you to do all of the work.