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Q & A

Sunday, October 1, 2006

What is the automated clearinghouse (ACH)?

The automated clearinghouse (ACH) is an electronic clearing system for exchanging credit (payment applied to an account) and debit (payment subtracted from an account) transactions among participating depository institutions. The Federal Reserve banks operate an automated clearinghouse, as do private organizations.

What types of transactions are usually made through ACH credit and debit transfers?

ACH credit transfers include direct-deposit payroll payments, Social Security benefits and tax refunds, and payments to contractors and vendors. ACH debit transfers include direct debits of consumer and business accounts for the payment of mortgages, bills and tax obligations.

What is Directo a México?

Directo a México is a program that is offered by the Federal Reserve banks so that money can be transferred by Mexican workers in the United States to their homes in Mexico using ACH. Transfers are carried out to and from bank accounts chosen by the account holders. Money may be withdrawn by the recipient in Mexico at the bank, using a debit card at an ATM or by requesting additional cash back when making a purchase with a debit card.

Why is using an ACH network a good way to send money to Mexico?

ACH is a very inexpensive and safe way to transfer money and is already in place in most financial institutions in the United States.

The content for Q & A was compiled by Billy Britt, economic education specialist at the St. Louis Fed's Little Rock Branch, and was largely adapted from Directo a México Frequently Asked Questions at