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The History And Future Of The ACH Network

December 3, 2021 • by shall

BIt’s hard to overstate just how valuable the ACH network is and has been for people around the United States. Major enterprises all around the country use ACH as the exclusive means of processing their payroll. In fact, streamlining payroll was actually the first use of ACH that became widespread throughout the financial industry. Companies, perhaps like yours, also use ACH for processing payments from customers. Using ACH technology, it becomes easier than ever to securely and routinely deal with credit cards, personal checks, and e-commerce.

What is ACH and where did it originally come from? Where is it going? You might not need to know this to benefit from the value of ACH, but it can be helpful. Entrepreneurs and executives who become informed get the most value from their tools, after all. 

The Early Days Of ACH Begin With The United States Air Force 

Although we look at it mainly as an internet-focused phenomenon today, The ACH network began long before computers were widely available to anyone. In fact, ACH—like the internet itself—was a federal initiative. And, also somewhat like the internet, it was intended to provide for the needs of defense. ACH was first used to help Air Force personnel get their pay checks on time. Initially, it only applied to Air Force members who were stationed within the United States.

Of course, the very nature of the service soon accelerated its growth into other areas. Before long, the federal government had a robust set of standards and processes for dealing with all kinds of payments. However, it took a while before all these capabilities were maximized. To make ACH more useful, the government adopted it as a major payroll standard. Today, many federal employees get paid through ACH. 

The Formation Of NACHA 

To make ACH useful throughout the private sector, it was necessary for financial experts to partner with their federal counterparts. Thus came NACHA, the National Automated Clearinghouse Association. NACHA quickly formed a strategy of regular meetings, maintaining a close eye on development of ACH-like technologies around the world.

As the internet began to link banks and customers, it changed its name to the Electronic Payments Association, though it is still known by its historic shorthand. With the help of NACHA, ACH has continuously evolved, and ACH processors like National Processing have been aggressive in adopting the highest standards. 

The Future Of ACH 

Over the next ten years, NACHA has set an agenda to create the conditions for real-time ACH processing. Although it may take until 2024, many contributors are optimistic that real-time ACH could arrive by 2016. National Processing is excited to be on the forefront of the new evolution of ACH. If you’d like to enjoy secure and speedy processing, call us today.

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