What does ACH stand for in financial transactions?

ACH stands for Automated Clearing House, which is a network used for electronically processing financial transactions in the United States. This system facilitates the transfer of funds between banks and financial institutions through electronic means, allowing for direct deposits, bill payments, and other forms of electronic funds transfers. The Automated Clearing House system streamlines these transactions, making them quicker, more efficient, and secure compared to traditional paper-based methods such as checks.

The terminology surrounding ACH is integral to understanding how it operates within the banking and payments landscape. With the rise of digital transactions, the ACH network has become increasingly important for handling a variety of financial activities, including payroll deposits and regular utility payments.

In contrast, the other choices do not accurately reflect the functions of ACH. Automated Check Handling and Automated Cash Handling are not established financial terms related to electronic transfers, while Automated Credit Handling does not encompass the full scope of transactions managed by the ACH network.