Which network is commonly used for direct deposits, payroll payments, and recurring bill payments between banks?

• A. Debit card network
• B. Automated Clearing House (ACH) network
• C. Interbank Information Network
• D. Mastercard network

Answer: (B)

The network used for direct deposits, payroll payments, and recurring bill payments between banks is the Automated Clearing House (ACH) network. ACH is a batch-oriented system that transfers funds electronically from one bank to another within the United States. For direct deposits and payroll, employers or government agencies send ACH credits to employees’ accounts, while recurring bill payments are typically ACH debits where the biller pulls funds on a set schedule. ACH is a cost-effective method suited for routine, non-urgent payments, with settlements occurring in batches—often next business day or the same day when same-day ACH is available. This contrasts with card networks like debit card systems or Mastercard for card-based transactions, and with information-sharing networks that don’t handle bank-to-bank transfers.