How ACH/EFT Payments Work

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How ACH/EFT Payments Work

The customer authorizes a company in writing to debit payments from a checking or savings account, and provides account number information.
If the amount of monthly payments varies, the company sends the customer a notification of the payment amount 10 days prior to the payment transaction. The customer may waive this right by signing a variable amount authorization.
The company may create test entries called prenotifications which the company's financial institution processes through the Automated Clearing House (ACH) network. The company is notified of any necessary corrections. No dollar value is associated with a prenotification.
The company prepares the ACH file for delivery to its financial institution one or two days prior to the effective date in a pre-arranged format, usually by transmission or on diskette.
The company's ACH Provider processes the information and delivers to the ACH network for distribution.
The customer's financial institution reports the transaction monthly on customer account statements.

Sources:
Direct Deposit and Direct Payment Coalition, www.directdeposit.org or www.directpayment.org
Board of Governors of the Federal Reserve System, www.federalreserve.gov
Mid-America Payment Exchange, www.mpx.org
NACHA, www.nacha.org