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NACHA files

NACHA files are the standardized file format that banks use to initiate batches of ACH payments. These files help banks execute large volumes of ACH payments through The Clearing House (TCH) and Federal Reserve.

Who creates NACHA files?

Most banks don’t natively support their own ACH API, which means they require third-parties to send or upload the files to their banking portal. In that case, businesses take ACH payments that customers have sent, serialize the data using code formatted to NACHA specifications, and then send the files to the bank to begin initiating payments. However, large national banks like Wells Fargo and J.P. Morgan have their own payment API to originate NACHA files internally. While these files are particularly useful to banks, they are not intuitive to everyday users. In fact, the specification manual for creating NACHA files is over 1,000 pages long. 

Who uses NACHA files?

Businesses, financial institutions, and payment operations platforms like Modern Treasury originate NACHA files to help banks initiate batches of ACH payments.

ACH payments are also a cost-effective option for businesses managing high volumes of transactions. For this reason, employers often use NACHA files for payroll. For example, say you're an employer looking for a direct deposit solution that moves money into your employees’ accounts quickly. NACHA files help businesses disburse recurring payroll deposits in an organized, efficient way that gives them more control over the process—at a lower cost.

What does a NACHA file look like?

NACHA files are populated line by line, with each 94-character line corresponding to a different payment. The characters on each line include essential details about the payment, including the account number, routing number, and more.

Are all NACHA files the same?

There are different types of NACHA files that serve different purposes. They may notify you of an inbound payment or explain why a payment wasn’t successful, for example. Though the details of a payment file can vary depending on the bank or financial institution, there are a number of Standard Entry Class Codes (SEC codes) that are required when sending ACH payment files. 

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File Standards

File Standards are the payment reporting formats used by banks and payment industry bodies.

  1. 1BAI2
  2. 2NACHA files
  3. 3ISO 20022
  4. 4MT940 File