A global ACH system expands the use of certain electronic payments beyond the North American region. Doing so makes it easier and less costly to transfer funds to other countries. Electronic payments using the ACH (Automated Clearing House) system are only possible within the United States and Canada. However, similar types of transaction processing systems are available in other countries or regions, such as Australia, China, Europe, Hong Kong, India, Japan, New Zealand, Singapore, and South Korea.
In order to initiate an ACH payment that crosses borders into the electronic payment system of another country, a business must enter its payment information into a portal (usually maintained by a bank) that links to the other country’s payment system. This may require the entry of different types of data, in order to comply with the message formatting requirements of the other system. Many of these systems do not allow for the inclusion of remittance information along with a payment, so the payer will need to supply this information to the payee separately, perhaps as part of an e-mail message.
In those parts of the world that do not have systems similar to the ACH system, it may be necessary to pay by the more expensive wire transfer method. A wire transfer is expensive not only for the sender, but also for the recipient, who is charged a lifting fee by the receiving bank to process the payment.
When the much higher cost of a wire transfer is compared to the cost of an ACH transfer, it is apparent that global ACH is a much more cost-effective solution, despite the issues with transferring information into the ACH formats required for different regions.