What is ach payment

ACH payments play a vital role in the business world and banking. An ACH payment is all about transferring money and making payments without the involvement of any card network.

An ACH (Automated Clearing House) is the largest and oldest payment system in the United States. The ACH is not exactly a household word, but many of us already depend on it. Believe it or not, the ACH payment network processed over eighteen trillion dollars in payments last quarter.

For context, the ACH network is over five times larger than the VISA network. It is how a direct deposit paycheck gets to an employee’s checking account. The ACH is simply a way of authorizing the utility company to make automated bill payments. For example, if you send a Venmo payment to a friend with no fee, this is likely an ACH.

Through ACH payments, depository institutions, banks, and even credit unions can quickly settle their various transactions between themselves.

What is ACH Payment?

An ACH payment is the primary financial network that connects United States banks to each other, mainly for electronic money transfers.

ACH stands for Automated Clearing House. It simply oversees the transfers of funds from various banks. ACH payment is a way to transfer money between banks and financial institutions without cash, paper checks, or credit cards. 

An ACH payment usually takes three to five business days in most situations. This is because the banks involved must communicate electronically to verify and process the transactions between the sender and the recipient’s account. ACH payments generally have a lower processing fee than credit card transactions or wire transfers. This is very important for businesses and consumers who wish to save money during the transfer process and make payments.

What Are the Examples of ACH Payments?

There are several examples of ACH payments, but there are two main types of ACH payments, they are;

  • Credit ACH payments
  • Debit ACH payments

#1. Credit ACH Payments

An ACH credit payment can be defined as a transaction whereby the funds are transferred into a bank account. For example, when an employer pays employees while using a payroll deposit.

#2. Debit ACH Payments

An ACH debit payment can be easily explained as a transaction whereby the funds are deducted from the bank account. For example, when an individual is making an online payment.

What Is Needed for an ACH Payment?

Due to the advantages of ACH payments, several people usually ask what is needed for an ACH transfer and how it works. 

You first need to open a checking account, which would help you provide the account and routing numbers. Whether you are the sender or recipient of the transferred funds, you must be able to provide all the necessary personal and also banking information.

The two banks of the sender and recipient would then communicate electronically to ensure the funds are available for their bank account. The money is transferred to the recipient’s account if there are enough funds.

Is ACH the Same as Bank Transfers?

ACH payments are similar to bank transfers, but the only difference is the charging rate. Other banks charge higher when debit and credit transfers of funds are made.

ACH payments are typically safer and more secure than other money transfer services. They must adhere to specific rules and regulations while keeping account numbers confidential. 

In addition, proper authentication and verification must be given before any transaction. Also, just in case fraud or hack occurs, transactions will be reversed or refunded. The consumer, the government, businesses, and some international payments usually use the ACH network.

Do All Banks Allow ACH Transfers?

In the United States, all banks allow ACH transfers. Any bank uses ACH; you need a valid working account and routing number.

How Long Do ACH Transfers Take?

The question “how long do ACH transfers take?” It is often asked by many. The people in charge of the ACH transfers have to follow a specific process containing rules and regulations.

Before any transfer is made, the provision of all personal information must be made both by the sender and the recipient. This includes proper authentication and verification. Also, the two banks involved would have to communicate electronically and check if the funds they want to be transferred are currently available. Due to all these procedures, an ACH payment will take up to one or even three business days.

Is ACH a Direct Deposit?

Yes, an ACH payment is a direct deposit. An ACH payment is also referred to as a direct deposit because it is seen as a kind of deposit done through the ACH network.

Why Do Banks Use ACH?

The ACH is simply an updated version of transfers with lesser charges, which perfectly suits the banks’ customers. 

The Automated Clearing House (ACH) has provided a process whereby the need to go and withdraw cash from a particular bank and then go to another bank for a deposit will not be needed. The ACH network is updated and helps various businesses, consumers, employers, and employees carry out credit and debit transactions with lesser charges and faster procedures.

Is ACH a Debit or Check?

An ACH (Automated Clearing House) can be referred to as a debit or credit transfer, not a check. This is because a check is paper cash, and before an individual can access that money, the person will have to go to the bank individually and through specific processes. On the other hand, an ACH helps people, businesses, and various companies transfer money without going directly to the bank.

Is ACH Payment Safe?

Yes, an ACH payment is safe. It is one of the safest, largest, and most used forms of the transaction (transfer of funds) in the United States.

How to Make an ACH Payment

There are simple ways to make an ACH payment if you have the necessary steps and guides to follow. Here are some tips on how to make an ACH payment, they are;

  1. Get signed up for an online bill payment. You must note that this should be with your bank or credit union.
  2. Look for the name of the person, business, company, or organization to which you want to make payment.
  3. Fill in a date and add the amount of payment.

ACH Payment Processing Time

The ACH processing time usually occurs from one to three business days. This is simply because the ACH process is filled with specific rules and regulations they’ll have to adhere to.

In addition, the transition of a credit card solely depends on the type of card, and it usually takes two to three days to complete the process of transactions finally.  

Moreover, the complete ACH processing time is from three to five days. This is how long it takes to complete a payment fully.

ACH Payment Processing

ACH payment processing is an electronic bank-to-bank money transfer processed through the Automated Clearing House network (ACH). 

These payments allow entities to secure, send, and receive electronic payments, even if they are all different banks.

Signing up to send or receive an ACH payment requires both sides to connect their bank with the ACH network. Also, giving them permission to deduct or credit their account.

Due to this reason, there are a lot of small businesses that are still hesitant to adopt ACH as a form of payment to their various vendors.

In addition, checks and ACH use the same kind of information. This is usually during the process of making payments or transferring funds. Information like the user’s account number and routing number.

ACH Payments Methods

There are several types of ACH payment methods, but the two main types of ACH payment methods are; debit and credit method. 

However, bank customers frequently use other types of ACH payment methods. Some of these payment methods include;

  • Person-to-person payments, eg, just like Venmo
  • Business bill payments
  • Direct deposit from employers to employees
  • Government benefit programs.


Through the provision and availability of ACH payments and the adopted methods which are being used, banking has become more accessible, better, and also faster for a lot of individuals. Technology is also a massive contributor to this, as ACH payments, the network, and methods would not even exist without it.


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