Automated Clearing House - ACH

It's the back end of your debit card, more or less. Think about ACH as a kind of secure method in which money gets emailed or file transferred from one database record to another in a secure fashion.

Most companies who actually pay their employees use ACH for direct deposit bi-monthly payments. If you have automatic payments from your bank, it's likely that the ACH network is pinged for each of those transactions. The world's key financial institutions have all agreed to conform to the ACH network standards, such that they can talk to each other from their financial vaults, AKA databases.

In managing an ACH network, the cost of transferring money from one database record to another within the network is almost nothing. This is in stark contrast to the method in which credit card payments are made, where there is credit risk and other elements that make their per transaction fees (painfully) much higher.

One note: ACH is not pronounced like you're clearing a hairball, or reading a Cathy cartoon. Just say the letters.