What is ACH Authorization?
An ACH (Automated Clearing House) authorization grants permission for a specific type of electronic payment from a customer. In other words, ACH authorizations allow automatic debits directly from your bank account to send to businesses like utility providers, online lenders and other types of companies that you regularly pay. Generally, ACH authorizations are established after you get approved for a loan or sign up for other types of recurring services.
ACH authorizations are widely used and accepted in many industries, and can help save time and money over other forms of payments. They can also help you save on stamps and checks, since the payment is sent directly through the Automated Clearing House network. ACH authorization is a safe and secure method to send payments to your lender, as companies who are authorized to use it to accept payments must comply with all applicable state and federal regulations.
ACH authorizations allow debits from your bank account to an authorized third party. ACH authorizations allow recurring debits, making it easy to pay your bills on time. Other methods, like eCheck transfer, are only used for one-time payments.
Once you’ve authorized ACH, payments can be prescheduled so you should know exactly when debits occur and how much money will be sent to the recipient. Usually, ACH authorizations are set up to be used for recurring payments, so there’s no need to remember to pay bills that have been preauthorized and scheduled through this payment method.