The ACH network is an electronic payment system that enables batch processing of transactions between financial institutions, providing faster processing than traditional checks. It comprises participants like originators and banks, facilitating both debit and credit transactions for various use cases including bill payments and payroll. Utilizing ACH allows for timely payments, reduced processing costs, and improved payment tracking without the need for physical checks.

1. ACH Payments
- Automated Clearing House(DDS/NACHA/NACH)
Surya Prakash Tripathi

2.  The ACH Network is a batch processing, store-and-forward system.
 Transactions received by the financial institution during the day are stored and processed
later in a batch mode. Rather than sending each payment separately.
 It also provides faster processing than paper checks, which must be physically handled.
Instead of using paper to carry necessary transaction information, ACH transactions are
transmitted electronically between financial institutions through data transmission.
What is ACH Network Operation

3. ACH Transactions
ACH Payment
ACH Debit
ACH Payment
ACH Credit
ACH PaymentACH
Transactions

4. Participants
ACH Payment
Participants
ACH
Operator(Central
bank)
ODFI/Sponsor
bank
Originator(comp
any/individual)
RDFI/Destination
bank
Receiver/
Beneficiary

5. What is ACH Network Operation
ODFI/Sponsor
bank
RDFI/Destinatio
n bank
Originator/corp
orate/individual
ACH Operator
Fund movement in case of direct credit transaction
Fund movement in case of direct debit transaction

6. ACH Debit Transactions
RDFI ODFIACH Operator Seller
In ACH debit payment, the seller “pulls” funds from the customer or buyer’s bank account for transfer to the
seller’s bank account.
Buyer bank Seller bank

7. Use Case 1 ACH Debit
Bob wants to pay his mobile bill automatically which means on due date his account should get automatically debited with
due amount.
But why do
you want to
pay bill
automatically
You
1
Bob
2
I usually forget to
pay bills on due
date so I want to
avoid this situation

8. Use Case 1 ACH Debit
Ok but how
would you do
that?
You
3
Bob
4
Through ACH
network

9. Use Case 1 ACH Debit
What is ACH
network and
Why to pay
with ACH
You
5
Bob
6
OK lets
understand
this concept

10. Introduction of ACH network(ACH Debit)
ODFI/Sponsor
bank
RDFI/Destination
bank
Customer/Emplo
yee/companyOriginator/corpo
rate/individual
ACH Operator
1
2
3 5
4
6
7
8

11. Authorization of Debit(Mandate)
This can be given by using eMandate or paper based mandate or in any other digital way (typically varies country to
country)

12. Why mandate is required for ACH Debit

13. Why ACH Network
Some of the most popular reasons to use ACH debit are:
• No need to remember to make payments.
• Elimination of the risk of late payments.
• Avoidance of late or interest charges through prompt, timely payments.
• No need to write checks (which you'll have to re-order once they're gone).
• Establishment of excellent payment and credit records.
• No need to get payments in the mail and pay postage.
• No need to wait for the postal service to deliver payments or worry about lost
mail.
• Easier to track payments since payee names appear on your bank statement or
financial software.
• More environmentally friendly (checks and envelopes use paper, and
transporting them uses fuel).
• Negligible processing charge compare to card and other payment modes.

14. ACH Debit examples
SIP Payments
Insurance
payments
Rentals
Loan/EMI
payments
Charitable
donations
Utility bill
payments
Contributions to
Individual
Retirement
Accounts

15. Quiz
1. In which direction fund movement takes place in ACH debit:
a. Originator to Receivers
b. Receivers to Originator
c. A and B
d. None of these are correct
2. Which instrument customer uses to give authorisation of debit in case of ACH debit payments:
a. Cheque
b. Demand draft
c. Paper Mandate
d. eMandate
3. Why does ACH operator send mandate files to RDFI
a. To verify customers account details
b. To check customers family details
c. To check customers job
d. To check account and customer details registered in the bank against the filled in details of mandate submitted by the
Customer

16. ACH Credit Transactions
ODFI RDFIACH OperatorBuyer
In ACH credit payment, the customer or buyer “pushes” funds from the buyer’s bank account to a seller’s bank
account.
Buyer bank
Seller bank

17. Use case 2 ACH Credit
BOB has opened a software company of 50-100 employee and he wants to credit salary on predefined date with less
processing charges and automatically.
How will you
do this many
fund transfer
in just 1 day
You
1
BOB
2 I will go with ACH
credit

18. ACH Credit
What is ACH
credit
You
3
BOB
4
Ok let me
explain you
this

19. ACH Credit
ODFI/Sponsor
bank
RDFI/Destination
bank
Employer
ACH Operator
1
2 4
3
6
7
8
5
Employee

20. ACH Credit examples
Interest Payment
Social welfare
payments
Tax Payments
Govt Vendor
payments
Dividends
payrolls - private
and government

21. Thank you !!!!!!!!!!!!!!!!!