NACHA

What are the origins of NACHA?

Long before electronic payments, money used to move through banks via paper checks. Clearing houses were physical locations where bankers would gather at the end of the business day to collect checks and “clear” them, ensuring money was accounted for accurately. Over time, large volumes of paper checks became difficult to keep track of, and banks were eager for a more efficient solution. 

In the early 1970s, a number of check clearing houses banded together in partnership with the federal government to build an automated payment method that could be used nationwide. With a regulated, national network of automated clearing houses, U.S. citizens and businesses could buy goods, get paid, and send payments with greater ease and efficiency. In 1974, NACHA was founded to regulate the ACH system as it still does today.

What is the role of NACHA?

The primary responsibility of NACHA is to write, maintain, and enforce the rules of the ACH Network. As the most widely used electronic payment processing network for bank transfers in the United States, it’s important that there are rules, regulations, and standards in place for using ACH. NACHA’s role is to provide clear and cohesive standards that apply to various institutions. 

There are two central clearing facilities that comprise the ACH Network: The Federal Reserve and The Clearing House. It’s important to note that NACHA’s guidelines apply to both parties.

From consumers and governments to businesses and financial institutions, these rules standardize how every participant understands and engages with ACH payments—to ensure millions of payments move efficiently and securely each day. 

How does NACHA create and update regulations?

NACHA relies on input from operators, regulators, member institutions, and network users to create regulations surrounding how to define transaction and product types, file specifications, and more. The NACHA operating rules and guidelines are over 700 pages long.