Accredited ACH Professional (AAP) Practice Exam

How does the ACH Network function?

1. Through real-time processing of transactions

2. As a batch processing, store-and-forward system

3. By direct bank-to-bank wire transfers

4. Through point-of-sale card transactions

The correct answer is: As a batch processing, store-and-forward system

The ACH Network functions as a batch processing, store-and-forward system. This means that transactions are accumulated over a period of time and processed in groups (or batches) rather than in real time. When an ACH transaction is initiated, it is not processed instantaneously; instead, it is scheduled for processing in cycles, typically on the same day or the next business day, depending on the type of transaction and the receiving bank’s policies. After the batch is processed, the transactions are then forwarded to the various financial institutions involved, which can take additional time for settlement and fund availability. This model allows the ACH Network to efficiently handle a high volume of transactions while optimizing processing costs and time management. Unlike other systems that may operate on a real-time basis, the batch processing nature of the ACH Network is a cornerstone of its functionality and widespread use in handling payments, such as payroll deposits, bill payments, and direct debits.