During the era of checks, every federal reserve bank hosted a "clearinghouse".
This was a location where all the banks under that Reserve Bank would meet and swap checks that had been given to them. Balances would be paid out.
ACH replaced that system electronically. Instead of a paper check, an ETF record is handed around and then money changes hands.
The system is still fundamentally controlled by the government. The only ways a transaction can be refused is either because it was unauthorized/fraudulent, or because the account doesn't have the funds.
To actually kick a participant out of the ACH system would require the participating entity to be recognized as a habitual source of fraudulent or overdrafting transactions, and that determination is made by the government, and can be fought in federal court.
During the era of checks, every federal reserve bank hosted a "clearinghouse".
This was a location where all the banks under that Reserve Bank would meet and swap checks that had been given to them. Balances would be paid out.
ACH replaced that system electronically. Instead of a paper check, an ETF record is handed around and then money changes hands.
The system is still fundamentally controlled by the government. The only ways a transaction can be refused is either because it was unauthorized/fraudulent, or because the account doesn't have the funds.
To actually kick a participant out of the ACH system would require the participating entity to be recognized as a habitual source of fraudulent or overdrafting transactions, and that determination is made by the government, and can be fought in federal court.