NACHA File Questions and Answers

If you use direct deposit to pay your employees, here are some commonly asked questions about NACHA files.

What is a NACHA file?

In general, a NACHA file is a means to communicate requests to transfer funds electronically.  In the context of Patriot PAY, a NACHA file is a text file that contains specific payment information for direct deposits.

What does NACHA stand for and what do they do?

NACHA stands for National Automated Clearing House Association. NACHA is an organization that establishes the standards and rules followed by financial institutions for transferring payments.  A NACHA file meets the format specifications set forth by NACHA.

Do I have to use a NACHA file to transmit my employees direct deposit information?

No. Your financial institution or third-party provider may provide you with other options for sending direct deposits to your employees, such as a web application. Keep in mind that such applications may require you to manually maintain your employees direct deposit information and enter the net amount to be paid each time you process a payroll. Let your financial institution or third-party provider know that Patriot PAY can produce a NACHA file when discussing which option will work best for you.