Understanding Ach Debit - BNG Payments 3285 47th St S, Fargo, ND 58104
Understanding the ACH Debit Process
More businesses are offering their customers ACH payments. The ACH payments have low transaction costs and predictable processing timelines, these are the reasons which make this payment liked by businesses all over the world. The number of ACH transactions processed per year is huge; it is somewhere more or less to 25 million transactions a year. There is a huge chain of banks and financial institutions that back the ACH credit and debit payment. The ACH payments are one of the greatest contributors to the GDP of the countries, resulting in the strengthening of the economy and the nation becoming stronger with each passing day.
What are the different types of ACH transactions?
To understand how ACH transactions work, we need to understand what ACH transactions are. Two types of ACH transactions are initiated, the ACH debit and ACH credit.
What is the definition of the ACH Debit Process?
When you set up an automatic payment for a particular service with a bank or a financial institution that is a form of ACH debit. It is an automatic withdrawal that happens from your bank account. To set up the process, you need to provide the bank account details to the ACH network. You authorize them to withdraw a specific amount from your bank on a particular date for a specific period.
How does the ACH debit process work?
Understanding Ach Debit is not so hard, each month when the specific date of transaction approaches, an ACH entry is created by the lender's bank which is automatically sent to the consumer's bank account. Based on the ACH entry, the consumer's account then withdraws the exact sum of money from the consumer's account and sends it to the lender's account on the specific date as a credit.
An originator creates the ACH debit transaction into the ACH payment system by obtaining the necessary information and authorization for the transaction. For example, if you have set up an ACH transaction each month for your broadband service, then, you share your bank account details with the broadband provider who sets up the ACH transfer, and each month as per the billing cycle a particular amount is automatically debited from your bank account to your broadband service provider.
The ACH debit transaction is a digitally safe procedure and the account details of both parties are protected through encryption. As long as there are sufficient funds in the bank account and the account details are provided correctly, the ACH debit transactions happen automatically and smoothly.