National Automated Clearing House Association manages the development, administration, and governance of the ACH Network, the backbone for the electronic movement of money and data in the United States. It is funded by the financial institutions it governs. The ACH Network serves as a network for direct consumer, business, and government payments, and annually facilitates billions of payments such as direct deposit and direct payment. The ACH Network is governed by the NACHA Operating Rules, a set of rules that guide risk management. NACHA is a 501 not-for-profit association incorporated in 1974. It represents nearly 11,000 financial institutions by way of eleven regional payments associations and direct membership. NACHA is not directly involved in the ACH transactions that flow to and from organizations and financial institutions.
History and Organization
In 1972, the California Automated Clearing House Association was formed, becoming the first operational ACH association in the United States. After two years, other regional ACH associations were formed. The associations came together in 1974 to create NACHA, which was tasked with developing, governing and administering the ACH Network. While NACHA administers the Network, it does not operate the physical ACH Network; the processing of transactions is handled by the Federal Reserve and The Clearing House. Originally part of the American Bankers Association, NACHA separated in 1985 and hired Bill Moroney as its first CEO. He was succeeded in 1988 by Elliott McEntee. Upon McEntee's retirement in 2008, Janet O. Estep became NACHA's President and CEO. In 2019, Estep was named President Emeritus and Jane Larimer became NACHA's President and CEO.
Initiatives
NACHA’s establishment led to the first ACH rules being drafted, and that in turn paved the way for the very first type of ACH transactions, known as direct deposit. The U.S. Air Force became the first employer in the nation to initiate a direct deposit payroll program. Direct deposit is the way nearly 93 percent of Americans get paid. NACHA wrote and administers the Quest Operating Rules for Electronic Benefits Transfer which have been in place since 1996. Under the administrative simplification provisions of the Affordable Care Act, NACHA was designated by HHS as the standards development organization for the healthcare EFT. NACHA’s CCD+Addenda payment was designated as the standard healthcare EFT transaction. Under the administrative simplification framework, health plans are required to pay claims using the standard EFT transaction when requested by healthcare, medical or dental practices. In 2018, more than 306.7 million ACH electronic funds transfer payments, valued at $1.59 trillion, were made from health plans to healthcare providers. In 2018 NACHA acquired the Interactive Financial eXchange Forum. In September 2018, NACHA launched Afinis Interoperability Standards, a membership-based standards organization, to develop interoperable, portable financial services standards. IFX Forum is a part of Afinis Interoperability Standards. In October 2018, NACHA announced it had acquired the Business Payments Directory Association. In June 2020, NACHA named Lyons Commercial Data as its Preferred Partner for handling their Routing Number and Account & Ownership Verification.
Secure Vault Payments
Secure Vault Payments is an electronic funds transfer payment system created by NACHA in 2008 that transfers funds for online and mobile payments.
