The Automated Clearing Settlement System (ACSS), introduced in 1984, is the system through which the vast majority of payment items in Canada -- more than 17 million on an average business day -- are cleared. Clearing means the process of exchanging and reconciling payment items that result in a transfer of funds from one financial institution (FI) to another. Settlement means the process of adjusting financial positions of individual FIs to reflect the net amounts due to and from them (including interest compensation) as a result of the inter-member exchange of payment items.

The core of the ACSS is an information system used to track the volume and value of payment items exchanged between CPA members and determine the balances due to and from participants. In addition, a framework of ACSS Rules and Standards details the procedures that apply to the exchange, clearing and settlement of the various categories, or "streams", of payment items cleared through this system.

Within the ACSS, 11 CPA member financial institutions, referred to as Direct Clearers, handle the clearing and settlement of payment items for their own customers, as well as for customers that maintain accounts at the other financial institutions, known as Indirect Clearers. (The Bank of Canada is also included among Direct Clearers.)

The ACSS is used for clearing both paper-based payment items, such as cheques, and electronic items, including Automated Funds Transfer debits (e.g. pre-authorized debits) and credits (e.g direct deposits). Each time payment items are exchanged between Direct Clearers, data is entered into the ACSS to track the total volume and value of items in the particular stream. These entries are made by the Direct Clearer that is owed money; that is, the delivering Direct Clearer enters the data for debit streams, and the receiving Direct Clearer enters the information for credit streams. At the end of the daily exchange process, these entries are used to determine the net positions of the Direct Clearers.

Direct Clearers must maintain settlement accounts at the Bank of Canada. During the morning of each business day, the Bank of Canada adjusts the financial positions of the individual Direct Clearers by transferring funds among their accounts to reflect the net balances of the previous day’s ACSS clearing. In turn, Indirect Clearers settle with their respective Direct Clearers through special accounts they maintain with them.

Although 99 per cent of the daily transaction volume is cleared through the ACSS, these transactions represent only about 12 per cent of the total value cleared, as most ACSS payment items are for relatively small amounts. Approximately 88 per cent of the total value is cleared via the Large Value Transfer System (LVTS).