By: Chuck Kettenacker, Capital Bank, NA
In banking, ACH stands for Automated Clearing House, which is a network that coordinates electronic payments and automated money transfers. ACH is a way to move money between banks without using paper checks, wire transfers, credit card networks, or cash. This batch processing system consists of computers working together to process millions of payments payments automatically in either a “clearing house” or the Federal Reserve.
To be an ACH Originator you must apply through your bank. ACH is considered a credit product due to the risk involved and is regulated by NACHA (www.nacha.org). Your bank will likely ask you to complete an application, sign an ACH Agreement, and may want to see monthly or quarterly filing reports if the daily transaction limit is above a specified amount in outgoing originations or credits.
Risk is primarily associated with debiting consumer or retail checking accounts. For business to business transactions, issuing payments or pushing credits to another business is less risky. All banks have a different fee structure, but you can expect a one-time setup fee between $50-$150, monthly ACH access fee usually around $20-$40, and a per item fee under $0.35. Setup can take a few weeks.
Can a PAC use ACH to send funds to Candidates?
Absolutely. According to the FEC, ACH is an acceptable way to contribute: “All disbursements (except those made from a petty cash fund) must be drawn by check or similar draft on the committee’s campaign depository or must be made by wire or electronic transfer (including automatic clearing house (ACH) debits) from the committee’s campaign depository.” (https://www.fec.gov/help-candidates-and-committees/keeping-ssf-records/recording-disbursements-ssf/). Just like a credit cards, the funds are electronically transferred to an account by the processing company or bank.
In the current crisis, with everyone working from home on a laptop, it’s safe to say that most people left their check stock locked up in their office, or maybe they weren’t allowed to bring them home.
Here is where ACH is a great tool. All you will need for a transaction is:
- The recipient’s account information (Account Name, Account Number, Bank ABA or Routing Number).
- Enter it into the banks online system.
- Submit the file.
Benefits of ACH over writing checks:
- Send a contribution electronically to a recipient, or multiple recipients to arrive the next day.
- Save a template for a future transaction.
- Establish dual controls and added security by having ACH creators and approvers.
- Cheaper than check stock and doesn’t require an envelope or stamp.
- Reduce the risk of check fraud on your account.
- Account reconciliation is much easier, eliminating outstanding checks.
- Secure, convenient, and easy to use.
Capital Bank has worked with several Corporate and Trade Association PAC to setup ACH Origination. We provide a dedicated team member who understands the industry and will walk you through the process from application to sending out your first payments. Our cost structure is quite modest, and well below what some of the other institutions charge.
Chuck Kettenacker
SVP- Relationship Manager, Political & Non-profit Banking
Capital Bank
For additional inquiries, please contact Mr. Kettenacker here.