FAQs about ACH

ACH payments make sending and receiving money easy and have become popular among consumers, with over $80.1 trillion in payments sent in 2023 alone. When you request your paycheck to be directly deposited or schedule your insurance payment to come out of your checking account, you’re taking advantage of the conveniences that ACH has to offer.

Here’s more about this method of moving money around, including how it works, the benefits over other payment methods and the time it takes to receive your money. 

What are ACH payments?

ACH payments are electronic payments between bank and credit union accounts. They go through the Automated Clearing House (ACH) network, a payment system governed by NACHA. NACHA doesn’t process the payments but it ensures regulations are met and payments are processed according to the network rules.

In addition to being completely electronic (eliminating the need for paper checks), ACH payments can be sent between most U.S. banks and credit unions, making them an accessible option for many consumers. They can be scheduled in advance or even be automated to reduce the work around paying bills, getting paid from an employer and sending money to friends and family. 

Transfers usually take one to three business days and ACH payments cost less than competing options like wire transfers. 

How do ACH payments work?

ACH payments are divided into two types: push transfers and pull transfers. The type of transfer depends on which direction the money moves relative to the bank initiating the transfer, also called the Originating Depository Financial Institution (ODFI). The bank receiving the transfer request is called the Receiving Depository Financial Institution (RDFI).

Push transfers — or ACH credits — include paychecks, social security payments and tax refunds from the IRS. The person setting it up would push money into the receiver’s bank account. 

Pull transfers — or ACH debits — include bill pay services, recurring billing arrangements and payments sent to friends or loved ones. The person setting it up would have money pulled out of their account to pay a business or another person.

Each ACH payment request is batched as payment files with other requests and sent through the ACH system at various points throughout the business day. 

Here’s how it works:

1. The business or employer sets up the ACH request with their bank (the ODFI).
2. The ODFI sends ACH payment files to the ACH operator.
3. The ACH operator sends the files to the RDFI.
4. The RDFI credits or debits the receiver’s bank account and settles the payment. 

ACH payment vs wire transfer: What’s the difference?

ACH and wire transfers both move money electronically, but they have some key differences.

	ACH	Wire Transfer
Processing time	1-3 business days	Completed within hours or the same day
Cost	Free or very low-cost	Higher fees
Availability	U.S. only	Worldwide
Usage	Direct deposits, bill pays and P2P payments	High-value transactions, like home purchases  International transfers to friends and family
Intermediary	ACH network	Usually sent from bank to bank
Reversibility	Can sometimes be reversed if there’s an error	Very difficult, if not impossible, to reverse

How long do ACH payments take?

The time it takes for an ACH transfer to process depends on a few factors, including the type of ACH payment and when the payment was initiated. Since ACH transfers happen in batches, the timing of the batch may push the transfer to the next business day. Bank policies also greatly affect the timing, as each institution has its own rules for handling ACH requests and making the money available to the account holder. 

Standard ACH transfers can take up to one to three business days, but same-day transfers are usually complete on the day they are initiated. NACHA reports that 80% of ACH payments (including same-day ACH) settle within one business day. 

When do ACH payments post?

For an ACH payment to “post,” it must be completed and fully available to the receiving account holder. The posting time depends on the bank’s policies, the time the payment is processed and the type of ACH transfer. 

That’s why an ACH payment can complete in a day but not show up as available until later. Due to internal bank processes and cutoff times, a bank may process a payment one day, but it won’t be available to the account holder until the next day. 

What is an ACH payment API?

An ACH payment API is a type of technology that integrates ACH payment processing capabilities into other apps, websites or digital products. An Application Programming Interface (API) provides code that lets developers incorporate external features, such as payments, into their projects. ACH Payment APIs make it easy for consumers or businesses to set up ACH transfers securely in their preferred apps, without having to go directly to their bank or credit union. 

The API works by verifying the payer’s bank account details and sending the request to the ACH network for processing.

Do ACH transfers go through on Saturdays?

The ACH network operates Monday through Friday, so payments don’t go through on Saturdays or Sundays. They also don’t process on bank holidays. 

Any ACH transfer initiated on a Saturday won’t process until the next business day (Monday) at the earliest. 

What is the ACH cutoff time?

An ACH cutoff time is the time of day when a bank or credit union will not process or credit any further ACH transactions. They will be credited for the next day, at the earliest.

Banks vary in their policies around their cutoff time, so the best way to know is to ask them directly. Remember time zones, holidays and weekends affect whether an ACH transfer will process. They may also have different cutoff times for same-day ACH transfers and standard transfers. 

Can ACH transfers be used internationally?

The ACH network is for domestic (U.S.-based) banks and credit unions. 

Payments can be made or received from banks outside the U.S. through International ACH Transactions (IATs), another NACHA offering that follows different rules and may not be available to all banks. 

Can I cancel or change an ACH transfer?

It’s possible to cancel an ACH transfer but you must act quickly. If nobody has processed it yet, you can request a change or cancellation through your bank. Same-day ACH transfers have a much shorter cutoff time, so there’s even less time to request a change. 

If the payment has already been processed, it will be more difficult to stop it. Your bank may only help in the case of errors. Each bank’s policies vary, so contact your bank immediately if you suspect a mistake or need to change an ACH payment.

What are some benefits of ACH payments?

ACH payments are popular with consumers and businesses because they offer the following advantages:

• Very low fees — and often no fees — in many cases (such as ACH paycheck deposits)
• Convenient to use
• Won’t get lost in the mail like paper checks 
• More secure than cash
• Very secure with encrypted technology
• Paperless format that supports sustainability

ACH is here to stay

With consumers and businesses using ACH for over 31 billion transactions last year, this payment option has shaped our financial world in a major way. Fast, affordable and secure, ACH is the preferred choice of consumers for a variety of use cases. 

Learn more about how ACH shapes how people pay and how companies can further streamline the process through innovative ACH payment APIs. Astra offers a faster ACH solution for companies in every industry. If you want to offer faster, safer ACH payments through your product or service, check out an Astra demo.