How to Use ACH to Send and Receive Money

The Automated Clearing House (ACH) is an electronic network facilitating financial transactions across the United States. It serves as a system for moving money directly between bank accounts, offering a digital alternative to traditional paper checks or more costly wire transfers. This network underpins a vast array of common payment activities, including direct deposits for payroll, automated bill payments, and person-to-person transfers. Its widespread adoption makes understanding ACH operations valuable for managing personal finances.

Key Information for ACH Transfers

Before initiating or preparing to receive an ACH transfer, gathering specific banking details is important. These details ensure that funds are routed accurately to the intended recipient and account. The primary pieces of information required include the bank account number, the routing number, the account type, and the full name of the account holder.

The bank account number identifies a specific checking or savings account. Individuals can locate their account number on a personal check, where it usually appears as the second set of numbers printed at the bottom, following the routing number. Alternatively, it is readily available through online banking portals or on a monthly bank statement.

The routing number is a nine-digit code that identifies the specific financial institution, ensuring the transfer reaches the correct bank. On a standard check, the routing number is the first set of nine digits located at the bottom left. For those without checks, the routing number can be found by logging into online banking or by reviewing a bank statement. Confirming the correct routing number with your bank is advisable, as some institutions use different routing numbers for various transaction types.

Identifying the account type, whether checking or savings, is also necessary for ACH transactions. The account holder’s full legal name, as it appears on the bank account, verifies the identity of the account owner. Providing precise information minimizes the risk of delays or rejections.

Sending Money Using ACH

Initiating an outgoing ACH payment typically involves using online banking services or third-party payment applications. The most common method for individuals to send money via ACH is through their bank’s online bill pay feature or by setting up external transfers.

To begin, an individual logs into their online banking platform and navigates to the payment or transfer section. Within this area, options to add a new payee or set up an external account transfer are available. The system will prompt for the recipient’s banking information. After entering these details, the user specifies the amount to be sent and selects the desired transfer date, which can be a one-time payment or a recurring schedule.

After reviewing the entered information for accuracy, the user confirms the transaction. Standard ACH transfers generally take between one and three business days for the funds to be processed and become available in the recipient’s account. Some financial institutions and payment services may offer same-day ACH processing for an additional fee, allowing funds to settle more quickly, often within a few hours. However, transfers initiated late in the day or on weekends and holidays will typically begin processing on the next business day, extending the overall timeline.

Receiving Money Through ACH

Receiving money through the ACH network is a common way to get funds directly deposited into a bank account. This process requires providing your banking details to the payer to initiate the incoming transfer. Individuals frequently receive funds via ACH for payroll direct deposits, government benefits like Social Security, tax refunds, and person-to-person payments.

For direct deposit of payroll or government benefits, the payer will typically provide a direct deposit authorization form. This form requests your bank’s routing number, your account number, and specifies whether the account is checking or savings. Some forms may also ask for a voided check to visually confirm the accuracy of the provided numbers. Once this form is completed and submitted, the payer can then electronically send funds directly to your designated account.

When receiving money through person-to-person (P2P) payment apps, you often link your bank account to the app by providing your routing and account numbers. The app then facilitates the transfer from the sender’s linked account to yours. After your banking details are provided to the payer, you can expect the funds to be credited to your account once the ACH transfer is processed. While direct deposits for payroll often arrive within one to two business days, other ACH credits typically clear within one to three business days. Funds become accessible once your bank posts the deposit to your account.