What is an ACH payment?

An ACH payment (also known as an ACH transfer or ACH transaction) is a type of electronic payment or money transfer made from one bank to another. These direct payments are processed via the Automated Clearing House network, or ACH network, a transfer system that facilitates transactions for financial institutions in the United States. In essence, ACH payments transfer money between different accounts. Common examples of ACH transfers include opting to receive paychecks via direct deposit, making direct deposits from a bank account into a college savings account or retirement account, or paying bills through a bank account rather than via credit and debit cards. ACH payments can be used for both one-time and recurring payments. 

ACH payments: Key benefits & considerations

There are a variety of reasons why individuals might prefer to opt for ACH payments as opposed to checks, credit card payments, or other payment forms. For one, because they do not need to be mailed, these types of payments are often quicker to send than a physical check. Another major advantage to ACH transactions is that they are often free, while wire transfers and other types of transfers can often come with fees. However, there may be limits to the amount of money that can be sent via ACH transfer. Additionally, cutoff times may exist for submitting transfers and having them processed by the next business day.