ACH(Automated Clearing House)PAYMENTS IN CREDIT CARDS 👲 😯 🙌 📈 ⚡️

Do you know that on a daily basis, millions of dollars move through a very complex but safe process internationally named ACH?

Have you ever paid your bill and any credit/debit card payments online? probably you are availing of this service that is known as ACH 👇. Do you know the world is moving fastly on ACH payments/or secure banking transactions instead of writing a check or entering a credit card number? So let's see what the ACH system is and how it works for secure transactions and credit card payments. 👩

What is ACH

In very simple terms, an automated clearing house (ACH)is a transfer of money/funds from one bank to another bank electronically without the physical exchange of currency which is managed by the National Automated Clearing House Association (NACHA), the network processes billions of transactions, handling trillions of dollars on a daily basis. 😃

Basically, ACH operators receive payment record entries from FIs(financial institutions ) in batches which are processed by a network operator three times a day. The ACH network is open for payment processing for more than 23 hours every business day and can take up to 3 or more business days based on the business case for funds to clear a customer’s bank account 💁because the bank must communicate electronically to verify and process the transactions between the sender and receipts bank accounts 🎻

ACH plays an important part in how consumers manage their finances on a daily basis. Businesses can also use the ACH network to receive payments from customers, send payments to vendors, and transfer money to and from accounts at different banks. You might schedule an ACH payment for your mortgage each month using an autopay setup.

Basic Steps: 📄

• First, you need to open a checking account to provide the account number and routing number
• secondly you must provide all the necessary personal and bank details whether you are a sender or receipts
• The two banks of sender and receipts communicate to make sure the funds are available in the sender’s bank account electronically.
• if the funds are available then money transfers to the receiver’s account.

ACH CREDIT :

If you use a credit card, that means you’ll likely have a payment to make every month. And staying on top of this minimum payment is important because it can help keep your account in good standing 👻. It’s also a big part of building healthy credit.

Knowing when and how to pay credit card payments can help you turn this task into a habit. Most credit card issuers let you pay by phone, through an online account or mobile app, by mail, or by autopay setup Here’s what to know about how you pay credit card bills and why it’s so.

HOW ACH WORKS

When funds are transferred there is an entity/owner that makes the payment called an Originator and another entity/customer who paid is known as Receiver. Below is the flow of this mechanism. lets us understand 🎮it from an example

Ach flow (Figure 2)

Alice 👧 is an organization that has started a business of credit cards. Her associated bank account is ODFI(originator financial institute).

Bob 👨 has issued the credit card from Alice by giving his bank information as RDFI(receiver financial institution) shown in figure 2. After the month ended Alice will originate a payment request for the funds as the Originator from Bob through a third platform known as ACH operator(Avidia in most cases). Bob initiates the payment from his bank(RDFI) by granting authorization to Alice/Originator. After the authorization, Alice/ODFI sends the bob information in an ACH file to ACH Operator and asks to verify if bob has enough funds available in his account. ACH operator forward that file to bobs bank(RDFI) having bob detail. After seeing the bob bank details, RDFI pull funds from the bob account and send them to the ACH operator. In the end, the ACH operator sent those funds to Alice’s bank(ODFI), and finally, 🙌 Alice got Payments from bob electronically using ACH Operator.

Pros of ACH Payments

• ACH payments are beneficial for both businesses and customers. for businesses it is an easy, fast, less costly, and efficient way to collect payments from customers electronically
• For customers, ACH payments offer a simpler process for payments. You can log in to your bank’s website, enter your payment details, and schedule payments in minutes directly from your bank account. If you want to simplify things even further, you can schedule recurring ACH payments for your monthly payments using an autopay setup.
• It is a secure process so fraud risk gets lower.

Cons of ACH Payments

• Unless you send ACH payments on the due date, transactions can take a few business days to process. Also, daily cutoff times apply to ACH transactions, which can delay processing times.
• Your bank may limit the dollar amount you can send via ACH or the number of transactions you’re allowed to complete each month. Most banks typically limit you to six withdrawals per month from a savings account, but your bank may impose other restrictions when sending money overseas through the ACH network that leads to delayed payment issues.

Conclusion

The ACH network is a remarkable technological system developed to make banking more efficient and secure. It benefits the lives of millions of people every day to pay promptly via direct deposit or pay your utility bills online without having to write a check you can be thankful for the ACH payments network. 😃. Hope you all like it. ⚡️ 😄