How ACH Processing Works

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While credit cards are the most widely accepted form of online payment, NETbilling's ACH (online check) solution gives merchants the ability to accept ACH payments at extremely competitive rates and increase transaction volumes by 20% or more. We offer enhanced verification options with this service, along with our enhanced fraud scrubbing modules to minimize fraud and returns. Like all NETbilling additions this solution is fully integrated in the NETbilling Payment Gateway. Merchants have the ability to accept an electronic check in the virtual terminal, on the payment form, and in Direct Mode, with little or no changes to their websites. This additional element is provided with all the same supplementary features as our credit card processing, including real-time reports, recurring billing, membership management, as well as customizable forms and email receipts.

This ACH solution does not require a merchant account, so there are no other costs involved in addition to the NETbilling fees.


What is ACH?


The Automated Clearing House (ACH) network is a highly reliable and efficient nationwide batch-oriented electronic funds transfer system governed by the National Automated Clearing House Association (NACHA) Operating Rules which provide for the interbank clearing of electronic payments for participating depository financial institutions. The Federal Reserve and Electronic Payments Network act as ACH Operators, central clearing facilities through which financial institutions transmit or receive ACH entries. ACH Payments include:

  1. Direct Deposit of payroll, Social Security and other government benefits, and tax refunds
  2. Direct Payment of consumer bills such as mortgages, loans, utility bills and insurance premiums
  3. Business-to-business payments
  4. Federal, state and local tax payments

According to NACHA (the organization that governs ACH in the U.S.), nearly two billion ACH debit payments totaling over $300 billion were initiated over the Internet in 2006. For more information on understanding ACH click here.



The ACH was conceived in the early 1970s, when it seemed that the increasing volume of paper checks used by businesses and consumers to pay their bills would eventually exceed the ability of the existing computer systems to process and sort the checks efficiently. The Federal Reserve participated in the early discussions and offered to provide the computer systems necessary to process and settle the ACH items between the depository institutions. In 1974, the regional ACH associations formed NACHA to coordinate the establishment of rules to facilitate the nationwide clearing of ACH payments.

The National Automated Clearing House Association (NACHA) develops the rule and the standards about ACH transactions. Learn more at

How Does It Work?


An ACH entry starts with a Receiver (the entity receiving a credit or debit) authorizing an Originator (the entity initiating a credit or debit) to issue an ACH credit or debit to an account. An Originator can be a person, the gas company, your local cable company, or your employer. Depending on the ACH transaction, the Originator must receive written (ARC, POP, PPD), verbal (TEL), or electronic (WEB) authorization from the Receiver. Once authorization is acquired, the Originator then creates an ACH entry to be given to an Originating Depository Financial Institution (ODFI) or Third Party Service Provider (TPSP), which can be any financial institution or provider who is capable of ACH origination. This ACH entry is then sent to an ACH Operator (usually the FED) and is passed on to the Receiving Depository Financial Institution (RDFI), where the Receiver's account is issued either a credit or debit depending on the ACH transaction.


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About Us

Since 1998, NETbilling, Inc. has provided multi-currency transaction processing, merchant accounts, and call center services to thousands of clients of all sizes. Our cost-effective solutions allow you to process credit/debit cards, e-checks, and mobile orders. NETbilling works with any business type and genre including high-risk, e-commerce, mobile, and card-present businesses.


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