NACHA-The Electronic Payments Association, and the Federal Reserve establish rules and regulations governing the ACH network. In ’02 alone, the ACH network processed about 8 billion ACH transactions with a total value of almost $22 trillion.

ACH credit transfers include vendor payments and direct deposit payroll. ACH direct debit transfers include various consumer payments such as payments on mortgages, insurance premiums, and various other kinds of bills. Companies are also starting to use ACH more and more to collect from online customers, rather than accepting debit or credit cards.

In accordance with ACH’s rules and regulations, no financial institution or organization may just issue an ACH transaction towards an account without first getting authorization from the account holder client.

An ACH entry begins with the Receiver authorizing the Originator (person or company) to issue an ACH credit or debit to an account. The Originator must get verbal, written, or electronic authorization from the Receiver. With verbal authorizations, it must be audio recorded, unless the Originator sends a transaction receipt details before or at the time of the transaction.  A written authorization means a signed form that gives consent on the date, amount, and sometimes frequency of the transaction. A web authorization means that a client must read and agree to the terms of the agreement.

After authorization, the Originator will create an ACH entry for ODFI or Originating Depository Financial Institution, in other words any financial organization that does ACH origination. This entry will then be sent to an ACH Operator and be passed on to the RDFI or Receiving Depository Financial Institution, where the Receiver's account is issued.

The Receiving Depository Financial Institution can reject the ACH transaction and then return it to the Originating Depository Financial Institution with a valid reason. An RDFI must perform returns in a certain time frame, between 2 - 60 days of receipt. However, most returned transactions are returned so within a day after the RDFI receives the transaction.