Before a business can accept eCheck payments, it needs to know the customer’s bank routing number and checking account number. You can get this information online, over the phone, or in person with a paper form. Most businesses have websites these days, and most of them have a secure form page where customers can fill out this information.
With this information, the bank of the merchant can talk directly with the bank of the customer. Once the money has been checked, the direct debit is done through ACH.
Each year, a lot of money moves through ACH. To give you an idea of the volume, think about how the ACH Network Volume grew 5.8 percent from Q1 2018 to Q1 2019.
Here are the people and organizations that are involved in ACH electronic check processing:
The business that cashes the eCheck is the one who made it. The direct deposit process starts when the originator gets the necessary information from the customer (see above).
The bank for businesses: The bank that started it all, also called the Originating Depository Financial Institution (ODFI). At the request of the originator, the business bank makes the ACH entry, adds up payments from different customers, and sends the payments in batches to an ACH operator.
A company that: The ACH operator sorts the fund request and deposits the money into the business bank.
The customer’s bank, called a Receiving Depository Financial Institution (RDFI), gets the request, checks to see if the money is there, takes the money out of the customer’s account and puts it in the business account.
In the past, ACH funds took a few days to post. However, the National Automated Clearinghouse Association (Nacha), which is in charge of ACH, has added a new feature that makes it possible to fund the same day.
