ACH payments move money directly from one bank account to another through an automated clearing house
ACH stands for Automated Clearing House. It is a network that processes electronic transfers between bank accounts in the United States. When you set up an ACH payment, money moves from your account to someone else's account — or from someone else's account to yours — without a check, wire transfer, or credit card involved.
ACH transfers are common because they are cheap for banks to process and reliable. Your employer might use ACH to deposit your paycheck. A utility company might use ACH to pull your monthly bill payment from your checking account. A landlord might ask you to send rent via ACH instead of a check.
The word "automated" matters: once you authorize an ACH transfer, the clearing house handles the rest. You do not need to do anything else. The money moves on a schedule you set or that the other party sets.
Key Takeaways
- ACH transfers move money directly between bank accounts and take one to three business days to complete, depending on whether the transfer is outgoing or incoming.
- You authorize an ACH transfer once, and the clearing house processes it automatically on the date you choose or the date the other party requests.
- ACH transfers cost little or nothing because they batch many transfers together, unlike wire transfers which process one at a time.
- You can stop an ACH transfer before it processes, but once the money leaves your account, you will need to contact the recipient to ask for a refund.
How long an ACH transfer takes
ACH transfers do not happen when ready. The clearing house batches transfers together and processes them at set times during the business day. A transfer you start on Monday morning might not reach the other account until Wednesday.
The exact timing depends on which direction the money is moving. If you are sending money out of your account (a debit ACH transfer), it usually takes one to two business days. If money is coming into your account (a credit ACH transfer), it might take two to three business days. Weekends and bank holidays add extra time.
Some banks offer faster ACH transfers called same-day ACH, but this is not standard. Check with your bank to see if they offer it and whether there are extra fees.
When you authorize an ACH transfer
You authorize an ACH transfer by giving permission to either your bank or the other party's bank. The permission usually comes in writing — either on a form, in your online banking portal, or through a bill-pay system.
When you set up automatic bill pay through your bank's website, you are authorizing an ACH transfer. When you give your employer your bank account number for direct deposit, you are authorizing an ACH transfer. When you sign up for a subscription and provide your checking account number, you are authorizing an ACH transfer.
The key is that you do this once. After that, the transfer happens automatically on the schedule you agreed to — weekly, monthly, or whenever the other party requests it.
ACH transfers versus wire transfers
Wire transfers and ACH transfers both move money electronically, but they work differently and cost different amounts. A wire transfer processes when ready, one transfer at a time, and usually costs between $15 and $30. An ACH transfer takes one to three days, batches with hundreds of other transfers, and costs nothing or a few dollars.
Use ACH when you have time to wait — paying a bill a few days early, sending rent to a landlord, or setting up payroll. Use a wire transfer when you need money to arrive the same day or the next day, or when you are sending money to someone outside the United States.
Your bank's bill-pay system almost always uses ACH, not wire transfers. If you need a wire transfer, you usually have to request it in person or by phone.
Stopping an ACH transfer before it processes
If you change your mind about an ACH transfer, you can stop it — but only if it has not processed yet. Once the clearing house has moved the money, it is gone from your account.
Contact your bank as soon as you realize the mistake. Tell them the date the transfer is scheduled, the amount, and where it is going. Your bank can cancel it if there is still time. The sooner you call, the better your chances.
If the transfer has already processed and the money has left your account, you cannot reverse it through your bank. You will need to contact the recipient and ask them to send the money back. If they refuse, you may have grounds to dispute the transfer with your bank, but this takes time and is not may provide to work.
What information you need to send an ACH transfer
To send money via ACH, you need the recipient's routing number and account number. The routing number identifies which bank holds the account. The account number identifies the specific account at that bank.
You can find both numbers on a check. The routing number is the first set of nine digits on the bottom left. The account number is the second set of digits, usually ten to twelve digits long.
If you do not have a check, you can ask the recipient for these numbers, or you can call their bank and ask. Some banks also let you look up routing numbers on their website.
ACH transfers and fraud
ACH transfers are generally safe, but they do carry some risk. If someone gets your routing number and account number, they can set up an ACH transfer from your account without your permission. This is called an unauthorized ACH debit.
If this happens, contact your bank right away. Federal law gives you up to 60 days to report an unauthorized transfer. Your bank must investigate and usually refunds the money while they look into it. Do not wait to report it — the sooner you tell your bank, the faster they can help.
To protect yourself, do not share your account number and routing number with people you do not trust. Be cautious about giving these numbers to websites or companies you have never heard of.
Frequently Asked Questions
Can I cancel an ACH transfer after it has been sent?
If the transfer has not processed yet, your bank can cancel it. Once the money has left your account and reached the recipient's bank, you cannot reverse it through your bank. You will need to contact the recipient and ask for a refund.
Why do some ACH transfers take three days instead of one?
The clearing house processes transfers in batches at set times. Incoming transfers (money coming to you) usually take longer than outgoing transfers because they go through more steps. Weekends and holidays also add time.
Is ACH the same as direct deposit?
Direct deposit is a type of ACH transfer. When your employer deposits your paycheck into your account, they are using the ACH network. ACH is the broader system; direct deposit is one common use of it.
What happens if I give the wrong account number for an ACH transfer?
The money will go to the account number you provided, even if it belongs to someone else. Contact your bank and the recipient's bank right away. They may be able to recover the money, but this is not may provide and can take weeks.
Do I have to pay a fee for an ACH transfer?
Most banks do not charge for incoming ACH transfers. Some banks charge a small fee for outgoing ACH transfers through bill pay, but many do not. Check your bank's fee schedule or ask a teller.