The word “clearing” refers to the process whereby funds move from one account to another to settle a payment an ACH routing number helps “clear” funds for quicker transfer on the same or the next business day, much faster than paper check payments or transfers, which take more time to mail, deposit and clear. 1 The first two digits of ACH routing numbers often range from 61 to 72, another way to distinguish them from ABA routing numbers.Īgain, ACH routing numbers are often used for electronic funds transfers of small one-time payments or scheduled recurring payments. Unlike ABA routing numbers, ACH routing numbers are used for electronic transactions between financial institutions. The acronym ACH stands for Automated Clearing House, and like ABA routing numbers, ACH routing numbers are nine-digit numbers unique to their respective financial institutions. ABA routing numbers apply to paper checks, which is why they are sometimes referred to as the check routing number.ĪCH routing numbers were developed in the 1970s - when the high volume of checks threatened to slow down the banking system - beginning a larger industry-wide shift toward electronic banking. Routing numbers are used for paying bills, reordering checks, or setting up a direct deposit with your employer (for your paycheck) or the IRS (for a tax refund). Smaller banks are assigned a single routing number, while multinational banks may have several. They are, in most cases, nine digits long, with the first two numbers being between 00 and 12. However, many don’t know there are two types of routing numbers: ABA and ACH.ĪBA routing numbers, named after the American Bankers Association, which first designated them back in 1910, help identify banks and financial institutions. Personal and business account numbers provide that exit off the superhighway, directing funds to the correct accounts. Routing numbers are like our financial system’s superhighway, facilitating the transfer of funds from one account to another. Many people are familiar with routing numbers - those nine-digit codes found on the bottoms of checks that identify a specific financial institution.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |