ACH payment

What is an ACH payment?

An ACH payment is an electronic bank-to-bank transfer processed through the Automated Clearing House (ACH) network in the United States. It allows money to move between bank accounts without using card networks, paper cheques, or wire transfers.

ACH payments are widely used by consumers, businesses, and government organisations for activities such as payroll, bill payments, recurring subscriptions, supplier payments, and account-to-account transfers. Unlike many card payments, ACH transactions are typically processed and settled in batches rather than being authorised instantly.

How ACH payments work

An ACH payment begins when a payer authorises a business or financial institution to send or receive funds from a bank account. The payment instruction is submitted to the ACH network, processed by participating financial institutions, and then settled between the sending and receiving banks. Once settlement is complete, the funds are credited or debited from the relevant accounts.

Depending on the payment type and processing schedule, ACH payments may settle on the same banking day or on subsequent banking days.

ACH credit vs ACH debit

ACH payments fall into two main categories:

• ACH credit. Funds are pushed from one bank account to another; common examples include payroll, supplier payments, and tax refunds.
• ACH debit. Funds are pulled from a bank account with the payer's authorisation; common examples include utility bills, subscriptions, and loan repayments.

In simple terms, an ACH credit sends money, while an ACH debit collects money.

Why ACH payments matter

ACH payments provide an alternative to card payments and wire transfers for businesses that need to move funds directly between bank accounts. They are commonly used for recurring payments, B2B transactions, payroll, and other payment flows where bank account transfers are preferred over card-based payments.

For payment teams, ACH can also introduce operational considerations such as settlement timing, returns, reconciliation, and payment authorisation management.