Editing ACH Network (section)

==History==
The ideas leading to the ACH arose in the late 1960s, evolving from the existing US [[Cheque|paper checks]] system. One early predecessor was a US federal initiative used to help United States Air Force personnel get their paychecks on time.<ref>{{cite web |url=https://nationalprocessing.com/blog/history-future-ach/ |title=The History And Future Of ACH |date=June 10, 2014 |author=Wayne Hamilton}}</ref> The success of this initiative led to an expansion to other employees and the government adopted it as a major [[payroll]] standard.

Separately in 1968 a group of check clearinghouse associations set up The Special Committee on Paperless Entries (SCOPE) to build an automated payment system after concerns for the number of [[cheque|checks]] being cleared for payrolls.<ref name=":0">{{Cite web|url=https://www.kansascityfed.org/Payments%20Systems%20Research%20Briefings/documents/723/briefings-psr-briefingdec07.pdf|title=The Evolution of the ACH|date=December 2007|website=Federal Reserve Bank of Kansas City}}</ref> The participants were exchanging physical checks, and using [[magnetic ink character recognition]] (MICR) technology to extract the check information for the end recipient of the check, which led to the insight that a central system could use MICR to extract check data, and then exchange that ''information'' between participants, instead of the physical checks themselves.<ref name="piu"/>

This led to the first ACH association, formed in California in 1972. Other regional ACH associations followed. The difficulty in compliance between different organizations led them to unite to form [[National Automated Clearinghouse Association]] (Nacha) in 1974.<ref name=":0" />

As with all [[social network]]s, ACH faced a [[Chicken or the egg|chicken-or-the-egg]] problem in that it was difficult to convince consumers to want to move funds via this method if banks didn't support it, and it was difficult to convince banks to join the network if customers weren't clamoring to use ACH. Arguably the single most important event in the history of the development of ACH was the United States [[Social Security Administration]] trialing [[direct deposit]] of [[Supplemental Security Income]] via the ACH network in 1975. This meant that joining the network enabled banks' customers to receive Social Security benefits via direct deposit instead of via paper check, which drove many US banks to quickly sign up with the network.<ref name="piu"/><ref>{{cite web
 | url =https://www.nacha.org/content/history-nacha-and-ach-network
 | title =History of Nacha and the ACH Network
 | last =
 | first =
 | date =2019-04-20
 | website =nacha.org
 | publisher =[[NACHA]]
 | access-date =2024-12-19
 | quote = }}</ref>

Nacha consolidated and added new rules which led to ACH. As computer and telecommunication technology advanced over the next few years, the system continued to develop. By 1978, [[Electronic funds transfer|electronic funds transfers]] were available.<ref name=history1>{{cite web |url=https://www.cachetservices.com/ach-payroll-processing-reconciliation-blog/the-history-of-ach |title=THE HISTORY OF ACH |date=June 27, 2016 |publisher=Cachet Services}}</ref>

From the late 1980s through to the 2000s, the system continued to develop with a number of enhancements. In 2001, there was a major reorganization of Nacha which led to [[financial institution]]s insured by the [[Federal Deposit Insurance Corporation]] becoming direct members, making it much easier for the ACH network to be used by banks; that same year internet payments also went into effect, which would go on to be a big part of ACH payments.<ref name=history1 />

Today, all US banks and credit unions are members of the network.<ref>{{cite web
 | url =https://www.nacha.org/content/ach-payments-fact-sheet
 | title =ACH Payments Fact Sheet
 | last =
 | first =
 | date =
 | website =nacha.org
 | publisher =[[NACHA]]
 | access-date =2024-12-19
 | quote = }}</ref>