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NACHA

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The National Automated Clearing House Association (NACHA) is responsible for overseeing the Automated Clearing House (ACH) Network, which is used to send money electronically between banks throughout the United States.

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.

Build better ACH workflows with the Modern Treasury API.

Modern Treasury is a payment operations platform built for the entire cycle of money movement. Our APIs and software applications directly integrate with your bank accounts, allowing you to process payments using ACH, RTP, Wires, and multiple other payment methods 2x faster than your existing solution. Modern Treasury automates payment reconciliation and accounting, giving you back time and control over your payment operations.

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Matt McFarland
Written by:
Matt McFarland
Last updated:
Oct 1, 2021
Last updated:
Oct 1, 2021

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Fedwire

Fedwire Funds Services, commonly known as Fedwire, is a real-time gross settlement transfer system that allows participating financial institutions to send and receive same-day fund transfers.

CHIPS

The Clearing House Interbank Payments System, or CHIPS is the largest private sector USD clearing system for wire transfers.

TCH

The Clearing House (TCH) is a banking association and payments company owned by 20 of the world’s largest commercial banks.

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What Happens When the Fed Goes Down?

The Federal Reserve (“The Fed”) promotes the stability of the financial system, including playing an important role in maintaining the integrity of the US payments system. What happens when the FedACH, FedWire, and National Settlement Service are offline?

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