Can ACH Payments Be Made Internationally?

The Automated Clearing House (ACH) is an electronic funds transfer system within the United States. It facilitates bank-to-bank money movement, commonly used for direct deposits of paychecks, automatic bill payments, and person-to-person transfers. This system is known for its efficiency and cost-effectiveness for domestic transactions. However, its extension to international payments involves more complexity.

Understanding Domestic ACH

The ACH network is a centralized electronic system for processing transactions between U.S. financial institutions. Governed by Nacha (National Automated Clearing House Association), it processes large volumes of credit and debit transactions in batches. These batches are then sent through central clearing facilities, such such as the Federal Reserve and The Clearing House.

Common uses for domestic ACH include direct deposit, where funds are “pushed” into an account, and direct debit, where funds are “pulled” from an account with authorization for payments like mortgages or utility bills. Its batch processing makes it a cost-effective method for non-urgent payments, though it typically takes one to three business days for funds to settle. It is designed for transfers between U.S. bank accounts, including those in associated territories like the U.S. Virgin Islands and Guam.

Limitations of Direct International ACH

Direct ACH payments from a U.S. bank to a bank in another country are generally not possible. Each country typically operates its own domestic electronic clearing network, similar to the U.S. ACH system. These national networks are not inherently linked for direct cross-border transactions.

No single, global ACH network directly connects all countries’ banking systems. This lack of direct interconnection stems from challenges like differing banking regulations, legal frameworks, data formats, and settlement processes across international borders. Consequently, a domestic ACH payment in one country cannot flow directly into another country’s domestic ACH system.

How International Transfers Happen

Since direct ACH is not an option for cross-border payments, individuals and businesses rely on alternative methods for international money transfers. One widely used method is the wire transfer, facilitated by networks like SWIFT (Society for Worldwide Interbank Financial Telecommunication). SWIFT is a secure messaging network that banks use to send instructions for transferring funds globally, connecting over 11,000 financial institutions in more than 200 countries.

Wire transfers are faster than traditional ACH, often settling within one to four business days, but are more expensive, with fees ranging from $15 to $50 per transaction. Another popular alternative involves international money transfer services and fintech platforms like Wise, Remitly, WorldRemit, and MoneyGram. These services leverage local banking networks or internal systems to bypass direct inter-country ACH, providing a more efficient and lower-cost solution for consumers.

ACH-Like International Options

While a direct, universal international ACH system does not exist, specific mechanisms and services allow for ACH-style international payments. Nacha, the governing body of the U.S. ACH network, has established a format called International ACH Transactions (IAT). An IAT is an ACH payment involving at least one financial institution outside the U.S. territorial jurisdiction.

IATs require participating banks (Gateway Operators) to adhere to specific reporting requirements, including OFAC compliance. While IAT is a structured way to send international payments through the ACH network, it operates through correspondent banking relationships rather than direct, seamless ACH linkage between countries. Some large banks also offer their own proprietary “international ACH-like” services to certain countries, providing a cost-effective option for non-urgent, recurring payments. These services typically allow beneficiaries to receive full-value payments in local currency within one to four business days, often with lower fees than wire transfers. Fintech innovations also provide an “ACH-like” experience by handling the complex international payment rails behind the scenes, using local payment networks to achieve lower costs and faster speeds than traditional wire transfers.