Associate Bank

What Is an Associate Bank?

An associate bank is a bank that is affiliated, normally through membership, in a regional or national organization, for example, a clearinghouse, an electronic payments network, or a bank card network, like Visa or MasterCard. There are normally various classes of membership in regional and national associations, which correlate with shares owned or fees paid.

How an Associate Bank Works

An associate bank is basically a bank that shares customers with different banks. Regional banks often band together to offer types of assistance to a more extensive net of customers. The term "associate bank" is additionally used to depict banks that accommodate each other's customers across geographic or national lines when each bank's geographic reach is limited. Associate banks might have members in various districts who can use services at all banks associated with a regional or national bank, typically a larger or more remote one.

Types of Associate Banks

Clearing Houses

Clearinghouses are banking associations used to work with the clearing of checks and different payments, including payments for securities and corporate payments. In the U.S., major clearinghouses incorporate the Automated Clearing House (ACH), which processes most debit and credit transactions, like payroll, vendor payment, and direct deposits. ACH additionally processes the greater part of the direct debit transfers utilized by consumers to pay their bills. Point-of-procurement check conversion is likewise dealt with through ACH. Most banking transactions in the United States are taken care of by ACH.

Other clearinghouses in the United States incorporate the Clearing House Interbank Payment System, which is utilized for large transfers, and Fedwire, which is operated by the Federal Reserve Bank. The Electronic Payments Network is a private sector member of the ACH operated by the Clearing House Payments Co.

Bank Card Networks

A bank card network is a vehicle for you to utilize your debit card at different areas on the grounds that the network transfers the payments, and approves, processes, and sets the terms of your card's transactions.

Most banks are associated with bank card networks that permit them to offer their customers debit and credit card services. Many bank debit cards operate on the Visa or MasterCard bank card network, the two most critical in the United States. Banks in different countries might be associated with various bank card networks. Be that as it may, the largest bank card networks permit customers to utilize debit and credit cards at ATMs and point-of-sale terminals around the world.

At the point when your debit card is connected to a network, it tends to be utilized in additional areas and offer you more freedom to utilize it.

Assuming your bank is an associate bank, it very well may be beneficial when you travel abroad. For instance, a small state bank in the United States might have an associate relationship with a bank in London to accommodate a customer going there.

Banking Associations

Many banks belong to regional or national bank associations that permit them to safeguard their interests through lobbying, perform community outreach and consumer education, lay out and keep up with industry standards and best practices, offer professional development to employees at member institutions, and circulate financial products and services.

Banking associations are viewed as trade associations. The largest banking association in the U.S. is the American Bankers Association; other banking associations incorporate the National Bankers Association, the Independent Community Bankers of America, and the Consumer Bankers Association.

Features

• An associate bank is a bank that is affiliated with a payments network, for example, a credit card or automated clearinghouse.
• Regional banks may likewise form partnerships with larger banks to work with services in a comparable type of association.
• Credit card payment networks and automated clearinghouses assist banking transactions with running all the more easily.
• On the off chance that you have a debit card with a Mastercard or Visa sign on it, you are connected to a more extensive credit card network than a debit card without one.
• Many banks who issue branded credit cards become associate banks in clearing networks that cycle and settle all payments.

FAQ

What Is the Purpose of the American Bankers Association?

Regional and national bank associations perform many purposes intended to safeguard their interests and instruct and support their communities. Banking Associations lobby, offer education and outreach, and support best practices and industry standards. Associations give bank employees support and professional opportunities. They give banking customers financial products and services.

What Are the Major Card Networks in America?

The major card networks in America are Visa, Mastercard, and American Express.

How Long Does It Take an ACH to Clear?

It generally requires three to five days for an automated clearing house (ACH) to clear your bank account.