Payment Systems – Details About A Few Different Systems

There are a multitude of different types of payment systems (wire transfers, checks, credit cards, bank drafts, etc,), and point of sale machines (payment gateways). The Internet definition for a payment system is- “The generally accepted method of payment for trade in the economy”.

Everyday worldwide consumers are utilizing different payment methods to conduct daily activities such as paying bills and shopping. If you pay with a credit or ATM card it is important that you understand what an ACH is about.

ACH stands for “automated clearing house”. It is an electronic banking network that operates exclusively within the United States of America. ACH processes large amounts of payments electronically (ex. Debit and credit card transactions). The automated clearing house also processes transactions for individual people such as paychecks, direct deposit or tax refunds (and also other government benefits).

This system is used by consumers to pay for many of their bills (car insurance, utility bills, etc.,) on a day to day basis. Consumers make their payments through POS (point of service) machines when shopping for goods and services. These “point of sale” terminals are also known as payment gateways. These payment gateways allow consumers to make automated payments using their credit card or debit card. This system allows individuals to process payments automatically without the need of carrying large sums of cash on hand.

The ACH payment system uses “Standard Entry Class Code”. This coding system assigns a particular three-digit code to each payment. This three-digit code is recognized by the ACH system which classifies the type of payment that is being made.

Some examples of codes processed:

– Accounts Receivable Entries

– Corporate Cash Disbursements

– Death Notification Entries

– Point Of Purchase

– Telephone Initiated Entries

There are a lot of payments being processed by the ACH. Due to the amount there are many companies that handle them (depending upon the region in the US the payment originated in). Some companies handle payments for numerous states while others only focus upon a single state.

There is so much to learn about transactions and how they are done. How and where you spend your money has a huge impact on how the payment is processed.

In conclusion, it is easy to see there are many different details behind the way payments are processed. As you go through your daily activities try to envision the different methods through which your payments are processed. Thanks for reading.

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