National Automated Clearinghouse Association (NACHA)

Written By
Paul Tracy
Updated November 4, 2020

What is the National Automated Clearinghouse Association (NACHA)?

The National Automated Clearinghouse Association (NACHA) operates the Automated Clearinghouse (ACH) network, which allows companies and consumers to send payments from one account to another.

How Does the National Automated Clearinghouse Association (NACHA) Work?

NACHA was established in 1974 through the merger of the California ACH Association, the Georgia ACH Association, the New England ACH Association, and the Upper Midwest ACH Association in order to establish uniform rules for exchanging ACH payments.

ACHs were born in the early 1970s after the use of checks became very popular and banks needed a faster way to process them all. Through the ACH system, financial institutions anywhere in the U.S. can exchange payments under a common set of rules and procedures. Essentially, ACHs eliminate the need to write checks for payments.

NACHA is a nonprofit association that represents at least 10,000 financial institutions. It also serves as a trade association for the members of the ACH network.

Why Does the National Automated Clearinghouse Association (NACHA) Matter?

The ACH network is the electronic foundation for moving money and information about money. Billions of ACH transactions take place in a year. If you have your paycheck directly deposited into your bank account, for example, you're using the ACH network. The NACHA operating rules govern the ACH networks. NACHA is not a government agency, but it works to ensure that payments are safe and secure between institutions.

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