How to Send an ACH Payment Step by Step

An Automated Clearing House (ACH) payment is an electronic funds transfer that moves money between bank accounts across the United States. This system facilitates secure and reliable transfers through the ACH network. It is a common method for various electronic money movements, including direct deposits of paychecks and automated bill payments.

Information Required for an ACH Payment

Before initiating an ACH payment, gather specific details from the recipient to ensure funds reach the correct destination. Without accurate banking information, the transaction cannot be processed correctly and may be returned.

The recipient’s full legal name or exact business name, as it appears on their bank account, is required. The specific name of the recipient’s bank is also necessary to direct the payment to the appropriate financial institution.

A bank routing number is a nine-digit code that identifies the recipient’s financial institution. This number is typically found on the bottom left side of a physical check, preceding the account number. Verifying this number is important because it directs the funds to the correct bank.

The recipient’s bank account number is also necessary, which uniquely identifies their specific account. This number is usually found on a check or bank statement. You will also need the recipient’s account type (checking or savings), as this distinction is necessary for proper processing.

To obtain this information, directly ask the recipient for their banking details. They may provide a voided check, which contains the necessary routing and account numbers, or supply the information through a secure online portal. Confirming these details helps prevent errors and ensures successful delivery.

Methods for Initiating an ACH Payment

Once you have gathered the necessary recipient banking information, you can initiate the ACH payment through various platforms. The process involves entering the collected details into a secure system.

Individuals and small businesses commonly use their bank’s online banking portal. After logging in, navigate to sections like “Transfers” or “Payments” to find options for external transfers or adding a new payee.

You then enter the recipient’s bank name, routing number, account number, and account type into the designated fields. You will also specify the exact amount you wish to send and the desired payment date. Before final submission, the system usually prompts you to review all entered details to confirm accuracy, which helps prevent misdirected funds.

Third-party payment applications and services also facilitate ACH transfers, often by linking directly to your bank account. These platforms typically require you to add the recipient’s banking information within their interface, similar to an online banking portal. After entering the details, you specify the amount and authorize the transfer.

For businesses, integrated accounting or payroll software frequently includes features for initiating ACH payments. These systems streamline the process by allowing businesses to send payments for payroll, vendor invoices, or other disbursements directly from their financial management platform. The software often stores recipient banking details for recurring payments, simplifying future transactions.

Understanding the ACH Processing Timeline

After an ACH payment is initiated, it does not transfer instantly but rather undergoes a structured processing timeline within the ACH network. These payments are processed in batches throughout the day, rather than individually as they are submitted. This batching allows for efficient and systematic handling of a high volume of transactions.

Each financial institution has specific cut-off times for initiating ACH payments. If a payment request is submitted after this daily deadline, it will typically be processed on the next business day. Understanding these cut-off times is important for predicting when a payment will begin its journey through the network.

Once processed, an ACH transfer typically undergoes a settlement period, which is the time it takes for funds to officially move between the sender’s and recipient’s banks. This period commonly ranges from one to three business days. For instance, a payment initiated on a Monday might settle by Wednesday or Thursday.

The final step involves the recipient’s bank making the funds available in their account. While the settlement period dictates when funds are transferred between banks, the recipient’s bank’s policies determine precisely when those funds become accessible to the account holder. This availability can sometimes be immediate upon settlement or may take an additional day.