How to Send and Receive an ACH Payment

An Automated Clearing House (ACH) payment is an electronic money transfer between financial institutions within the United States. This system processes large volumes of credit and debit transactions in batches. ACH payments are a common method for direct deposit of paychecks, bill payments, and transfers between personal bank accounts. It is a foundational element in electronic fund movement.

Sending an ACH Payment

Initiating an ACH payment requires gathering specific recipient details to ensure funds reach the correct account. You will need the recipient’s full name or business name, bank name, routing number, account number, and account type (checking or savings). This information is crucial for accurate processing through the ACH network.

Most individuals and businesses typically send ACH payments through their online banking portal, a third-party payment application, or business accounting software. Online banking platforms often have a “Transfers & Pay” or “External Transfers” section. For third-party applications like PayPal or Venmo, the process involves selecting a “send money” option and inputting the recipient’s bank details. Business accounting software often includes modules for initiating vendor payments via ACH.

After selecting your payment platform, submit the payment request. You will typically confirm recipient details, enter the payment amount, and sometimes select a transfer date. The platform usually presents a transaction summary for review before authorization. Upon submission, you will receive a confirmation screen, often with a transaction ID or reference number, and can monitor the payment’s status through your online banking or application’s transaction history.

Receiving an ACH Payment

To receive an ACH payment, provide your banking information to the sender. This includes your full name or business name, bank name, routing number, account number, and account type (checking or savings). This information allows the sender to properly route funds to your account through the ACH network.

You commonly provide this information when setting up direct deposit for payroll with an employer, receiving payments from clients, or for government benefits like tax refunds or Social Security payments. You can typically locate your bank’s routing and account numbers on a physical check or through your online banking portal or mobile application.

For direct deposit, you might fill out a form provided by your employer. For other payments, you might verbally share your details, input them into an online portal, or provide a voided check. Once an incoming ACH payment is processed, it will appear as a credit on your bank statement or in your online banking transaction history. Funds from direct deposits are typically available within one to two business days, while standard ACH transfers can take one to three business days.

Key Aspects of ACH Transactions

ACH transactions are processed in batches, not in real time. Standard ACH transfers typically take one to three business days for funds to become available. Same-Day ACH options allow funds to settle by the end of the same business day if submitted before specific cutoff times, often for an additional fee. ACH transfers are not processed on weekends or federal holidays.

Financial institutions or payment platforms may impose limits on the amount or number of ACH transactions you can send or receive daily, weekly, or monthly. These limits vary by institution and account type. Check with your bank for their transfer limits.

ACH payments can be reversed under limited circumstances, such as to correct errors or address unauthorized transactions. Reasons for reversal include:
Duplicate payments
Incorrect amounts
Wrong recipient accounts
Transactions processed at an unintended time
Nacha, the governing body for the ACH network, requires reversals to be initiated within five business days of the original transaction’s settlement date. Contact your bank to initiate a reversal.

While many consumer-initiated ACH transfers are free, some banks or businesses may charge fees. Businesses typically see processing fees per transaction, with Same-Day ACH services often incurring a higher fee. The ACH network is a reliable method for electronic fund transfers.