To say there are numerous ways to make or receive payment is a huge understatement. Today, business owners need to consider not only the many payment methods available, but also what options are most cost-effective for the business and which options will resonate most with their customers. While electronic payments innovations, such as mobile wallets and peer-to-peer payments, will continue to grow, there are several essentials for all businesses to consider—one of which is ACH transactions (ACH stands for Automated Clearing House, a centralized US financial network facilitating electronic payments and money transfers between banks and credit unions), a staple for all businesses for customer transactions, payroll, and more. The ACH payment method is a secure and efficient electronic payment option for transferring funds between business bank accounts and credit unions.
There is a lot of terminology surrounding payment processing, and ACH payments have their own vernacular. Businesses typically use a dedicated business bank account to manage ACH transactions and streamline payments. This article discusses what you need to know to better understand the ACH payments, including how ACH transactions work and how long an ACH transfer takes, and how they fit alongside other common payment methods businesses accept.
TL;DR
- ACH payments work as an electronic method for transferring funds between bank accounts, processed through the NACHA network.
- The terms ACH payment and ACH transfer are interchangeable in meaning and work by moving funds from one bank to another through a centralized system (the Automated Clearing House).
- ACH payments typically cost less than credit card processing fees, which can range from 1.5% to 3.5% per transaction.
- Standard ACH transactions settle based on a NACHA-mandated schedule: ACH credits (push payments like payroll) typically settle and are available on the next business day (T+1), while ACH debits (pull payments like bill payments) often follow a T+2 schedule. Both types are now eligible for same-day ACH settlement for a small additional cost.
- ACH payments can take 1 to 3 business days to process, while wire transfers can be completed the same or next day.
- Wire transfers can be sent internationally, whereas ACH transfers are limited to domestic transactions within the U.S.
- ACH payments are often preferred for business-to-business (B2B) transactions due to their lower costs and efficiency.
- ACH transactions are typically far less expensive than wire transfers or credit card fees, especially for larger transactions.
What is the Automated Clearing House (ACH) network?
The average consumer may not realize they regularly make and receive payments from the Automated Clearing House network (ACH), but in 2025, the ACH Network hit a major milestone, processing 35.2 billion payments—a 5% increase over 2024. The total value of these transactions reached $93 trillion, marking the 13th consecutive year that the network’s value has grown by more than $1 trillion. In 2023 alone, the ACH network processed 31.45 billion transactions, underscoring its scale and importance in the payments ecosystem.
Electronic transactions have taken over in popularity, and paper checks are starting to feel like a vestige of a bygone era. The ACH network is already in use for most organizations in the form of ACH direct deposit payroll and recurring payments done outside of debit and credit transactions. ACH payment acceptance is supported by a wide range of financial institutions, including credit unions, and all transactions are processed through the NACHA network. The ACH network enables efficient processing of transactions for both recurring and one-time payments, making it a reliable choice for businesses seeking to streamline payment operations.
Two types of ACH payments
ACH direct deposits
Direct deposits are payments sent from the government or businesses to consumers or employees. This includes government benefits, tax refunds, or your payroll. ACH direct deposits are made to a financial institution using the routing number and bank account number of the receiving institution to direct funds into the checking or savings account of the recipient. ACH transactions require sensitive bank details, such as account and routing numbers, for authorization, making secure handling of this information essential to protect against fraud and unauthorized access.
ACH direct payments
These are payments used by individuals or businesses to pay for goods or services. ACH direct payments, also known as ACH debits (or “pull payments”), are initiated by the recipient (the business) with the consumer’s authorization to pull funds from the consumer’s bank account. The ACH payment method is commonly used for recurring payments, such as subscriptions and utility bills, due to its efficiency and automation.
Examples of ACH transactions
93% of Americans are paid through direct deposit, meaning that the Automated Clearing House network is a part of the daily lives of most of the country already. Other types of ACH transfers are as follows:
- Paying an electricity bill with your bank account
- Transferring money to a friend from one bank account to another (Note: Zelle is primarily a real-time network, while other P2P services like Venmo, PayPal, and Cash App often use the ACH network for their standard, slower transfers).
- Paying for a wedding venue rental with routing and bank account information
- Making mortgage payments through automatic bank withdrawals
- Businesses paying for supplies with their business checking accounts—a dedicated business bank account is often used to streamline ACH payments and automate bookkeeping, and ACH payment processing is especially valuable for small businesses looking to lower costs and simplify cash flow.
How long does an ACH transfer take?
So, how long do ACH transfers take? An ACH debit transaction, such as bill payments through your bank, will typically take 1-3 business days to process. ACH credits, such as payroll direct deposit or payment to vendors and third-parties, take about one day to process.
The standard ACH processing time typically takes 1–5 business days to clear.
The ACH network processes payments for 23 ¼ hours each business day and settles transactions in batches four times per day during business hours of the Federal Reserve. ACH payments are settled through the Federal Reserve’s settlement service and system during business hours, which is integral to the timing and processing of ACH transactions.
Funds for non-same-day credits must be available by 9:00 a.m. local time on the settlement date as per new rules effective September 18, 2026.
ACH payments can be initiated through most financial institutions’ online member portals or over the phone.
What are same-day ACH transfers?
Starting in 2016, NACHA made same-day processing of ACH transfers available. Same-Day ACH continues to be the fastest-growing segment of the network. In 2025, there were 1.4 billion same-day payments valued at $3.9 trillion. This represents a 16.7% increase in volume and a 21.4% increase in value compared to 2024, as businesses increasingly rely on it for time-sensitive payroll and vendor payments. But with a same-day transfer, there are a few considerations to be aware of, including the cost and time of day for same-day processing.
The ACH operators now provide three windows for same-day ACH submission and settlement: The latest submission deadlines are typically 10:30 AM ET, 2:45 PM ET, and 4:45 PM ET, with corresponding settlement times later that business day.
If the cutoff time is met, the receiving depository financial institution (RDFI) will have the funds available same-day. The RDFI is required by NACHA to receive same-day ACH payments and make them available in the recipient’s account by 5 PM local time (for the RDFI). If the cutoff time is not met, the funds should be available in the receiving bank the next business day.
There is an additional NACHA fee component for same-day ACH transactions, which is paid by the ODFI to the RDFI. This per-entry fee, set by NACHA, is designed to incentivize faster processing. The collection and disbursement of these fees are handled by the ACH operators and reflected on the monthly statement.
In summary, when processing a same-day ACH transfer, the cutoff timelines matter, but in any case, ACH processing is often even faster than settling a credit card transaction.
How much money goes through ACH payment processing?
Direct deposit, combined with other payments and deposits, such as mortgage and utility payments, tuition and recurring subscriptions, made through the ACH network exceed 90 trillion dollars annually.
The terms ACH payment and ACH transfer are interchangeable in meaning and work by moving funds from one bank to another through a centralized system (the Automated Clearing House). This payment method saves time and money for the business and customer and is ideal for many types of payments, including but not limited to recurring and scheduled transactions.
Take control of getting paid and say goodbye to the stress of late payments with ACH debit. Automate collection and reconciliation, saving time usually spent on financial admin.
Related content: 5 benefits of ACH payments over check payments
ACH payment vs credit card payment
Credit card payments are straightforward and well known. The card number, expiration date, and CVV security code are required to process a payment or send a refund. The average credit card processing fee varies, but as of 2025, it is typically between 1.5-3.5%, excluding other monthly fees to the merchant services provider and other costs of equipment, and merchants should understand the full breakdown of credit card processing fees when comparing them to ACH pricing.
Credit and debit card transactions may be costly for merchants but are a mainstay of business operations. Digital wallets linked to credit and debit cards are also gaining traction in small and large businesses. These offer a convenient solution for the customer, with fees similar to those of a typical swiped card transaction, and merchants should also understand how debit card processing fees work when designing their overall payment mix.
Furthermore, while ACH transactions have a lower overall fraud rate than checks, they are subject to ACH returns (like R05 or R07 for unauthorized debits), which function differently than credit card chargebacks and offer different dispute resolution timelines.
How much does it cost to process ACH payments?
ACH payments are done directly through a bank account, requiring the name of the bank, type of account (checking or savings), and the routing and account number. ACH transfers usually take one to three business days to complete and can be a lower-cost option for businesses (the average cost of a transaction is about $.29). Processing payments via ACH typically involves working with payment processors, who manage transaction security, compliance, and integration, and generally charge lower fees than credit card processing.
ACH payment processing costs vary by provider but are generally lower than credit card processing fees. Most payment processors charge a percentage per ACH transaction plus a flat fee, with fees through a third-party payment processor typically ranging from 0.5% to 1.5% plus 20 cents to $1.50 per transaction.
These payments are commonly used for direct deposit payroll, recurring bill payments, large business-to-supplier transactions, and payments and refunds to and from the IRS, and can be further optimized by using tools that simplify overall payment processes.
To accept ACH payments, a business must set up a dedicated business bank account and consider leveraging a secure API-driven payments platform to integrate ACH alongside in-person and online payment channels.
ACH payments vs wire transfers vs EFT payments
The main difference between an electronic funds transfer (EFT) and ACH payments is that EFT is a term for all types of digital payments, but ACH is a specific type of digital payment—so ACH is a type of EFT payment.
Whereas wire transfers may seem similar to ACH payments on the surface, they have a few key differences. Wire transfers are more costly, with an average charge of $10-$35 per transaction, and they operate like an electronic cashier’s check. This means that when sending a wire transfer, the funds are immediately pulled from the sender’s account and cannot usually be reversed. Wire transfers are routed through the Federal Reserve Wire Network, which is designed for high-value and international transactions and is known for its speed and associated costs, while ACH payments are processed through a highly regulated, bank-to-bank network with multiple security protocols.
Processing time is faster with wire transfers and usually cleared within the same business day. Wire transfers also have a level of risk associated with them because once sent, they are difficult to reverse. Wire transfers can be done internationally, which is both a benefit and a risk. Verifying the recipient is imperative to protect against fraud, and users should be careful when sending a payment via wire transfer.
This difficulty to reverse makes wire transfers highly susceptible to social engineering and fraud schemes, making ACH a much safer alternative for routine or new business transactions. ACH payments are generally more convenient for recurring transactions compared to wire transfers and credit cards.
ACH credit transfers (ACH push payments)
ACH payments are usually divided into push payments and pull payments. Push payments send money, and pull payments collect it. Though they are similar, they work in slightly different ways. Push payments are typically originated by the payer (e.g., payroll, vendor payment) and are known as ACH credit transfers. ACH credit transfers are used to transfer funds electronically between bank accounts, supporting efficient payment flow for businesses. The payer instructs their bank to send money from their account to another account, while a pull payment is where you provide bank account information to the payee, and the amount is then withdrawn.
ACH transfer transaction limits
According to the National Automated Clearing House Association (NACHA), which manages ACH payments, as of 2022, the same-day ACH dollar limit is $1 million per payment, which makes it eligible for a significant number of B2B payments that were previously restricted to next-day or standard ACH processing.
However, ACH transfer limits are subject to other rules on how much money can be moved. These limits can be per day, per single transaction, or per single month, depending on the bank. And it is likely that your incoming ACH transfer limits may still average around $25,000.
ACH payment security
ACH payment security is a top priority for any business looking to accept ACH payments, whether for one-time transactions or recurring ACH payments. The Automated Clearing House (ACH) network is built with multiple layers of security to ensure that funds are transferred safely between bank accounts, but it’s essential for businesses to understand and implement best practices to further protect their payment processing.
When you accept ACH payments, your payment method relies on the secure exchange of sensitive banking information, such as account and routing numbers. The ACH network itself is designed to minimize risks, with both the Originating Depository Financial Institution (ODFI) and the Receiving Depository Financial Institution (RDFI) playing critical roles in verifying and authenticating each transaction. These depository financial institutions work together to ensure that only authorized transactions are processed, helping to prevent unauthorized transactions and fraud.
To further enhance ACH payment security, businesses should leverage advanced fraud prevention tools as part of their payment processing strategy. This includes using encryption and tokenization to safeguard customer banking information during payments online, as well as implementing robust customer verification processes. For recurring ACH payments, it’s especially important to obtain clear authorization from customers and to regularly review authorization records to ensure compliance with industry regulations.
Additional security measures, such as real-time balance checks and account verification, can help prevent failed transactions due to insufficient funds or invalid account details. These protocols not only protect your business from potential losses but also improve the overall payment experience for your customers by reducing the likelihood of payment delays or errors.
By prioritizing ACH payment security and staying up to date with the latest fraud prevention tools, businesses can confidently accept ACH payments online and instantly, knowing that their payment system is protected against evolving threats. Whether you’re processing payroll, collecting bill payments, or enabling recurring ACH payments, a secure payment flow is essential for maintaining trust and reliability with your customers.
In today’s digital landscape, accepting ACH payments is a convenient and cost-effective payment solution, but it’s crucial to make security a cornerstone of your payment processing strategy. By working with a trusted payments platform and implementing comprehensive security measures, you can ensure that every ACH transaction—whether a direct deposit, ACH debit, or ACH credit—is processed safely and efficiently, protecting both your business and your customers.
Benefits of ACH payments
Now that we’ve covered the fundamentals of ACH payments, let’s look at some of the benefits of this payment type. Businesses that accept payments via ACH can save money and improve customer experiences. ACH payments also offer customers a convenient, hassle-free way to pay, which can lead to higher customer satisfaction and retention rates.
Less expensive than other methods of payment
One of the main benefits of ACH payments is the cost savings for large transactions. ACH transfers are typically priced either with a low, flat per-transaction fee (e.g., $0.20 to $1.50) or a small percentage fee (e.g., 0.5% to 1.5% with a cap—a common model being 1.0% up to $10). This fee structure makes them significantly less expensive than percentage-based credit card fees, especially for high-value transactions.
Great for recurring transactions
Recurring payments are convenient via the use of ACH transfers and are already in use for many consumers for transactions like automatic bill pay. An added benefit for the consumer and businesses using ACH transfers is not being inconvenienced by expiring credit and debit cards, as bank account numbers do not change unless an account is closed or compromised.
While most payments are made either electronically or through ACH transfers, checks are still in use for many. The convenience factor for ACH deposits is a big draw to move away from paper check payments. For a customer using checks, they have to remember to make the payment, write out and mail the check, and then wait for the postal service to deliver and payment to be processed. This adds days to the process and leaves a lot of opportunity for human error.
Using an ACH payment means the customer does not need to remember to pay the bill, the processing time is sped up, and the business doesn’t need to physically deposit a check and wait for it to clear.
Safe and secure
ACH is a safer option for customers because the transaction itself uses encrypted network transmission and does not expose the customer’s full account and routing number on a paper document or transmit sensitive card data across unsecured channels, unlike checks or certain card-on-file systems. Since ACH payments are not immediate, they are able to be reversed, which makes it harder for a bad actor to compromise banking information.
More convenient for your customers
Since ACH transactions can be a safer payment option for customers and reduce fees that a merchant may pass on, this means that an ACH payment is often the preferred option for your customers.
Additionally, ACH payments can help businesses manage cash flow more effectively due to their predictable processing schedule, enabling faster and more reliable fund transfers that support better cash flow forecasting.
How to accept ACH payments
Many businesses already offer a variety of secure payment options to their customers. With modern payment platforms, you can accept ACH payments instantly, providing greater convenience and efficiency for both your business and your customers. Giving customers the ability to choose what suits their payment preferences can encourage purchases and increase business; companies benefit by being able to accept payment in multiple forms, eliminating a potential barrier to purchase.
You can receive ACH payments either directly through your bank account or via a third-party payment processor, each with its own operational procedures and security protocols. Accepting ACH payments can also improve cash flow by reducing costs, speeding up transaction processing, and simplifying invoicing and accounts receivable management.
Businesses planning to use ACH payment methods must ensure compliance with Know Your Customer (KYC) and anti-money laundering (AML) requirements, and NACHA has strict security regulations for any institution or organization involved with ACH transactions.
If you’re planning to accept ACH payments and enable ACH transactions between your business and your customers, here are some steps you can take to get started.
1. Determine the role of ACH payments in your business
As with any business decision, it’s important to determine how ACH payment adoption fits into your strategy. Before implementing it, be sure to have a clear business case for ACH transactions.
Do you have customers who are requesting the ability to work with ACH direct deposits? Will ACH streamline processes, improve the customer experience, and ensure that you actually get paid? The answers to these questions will help you figure out if there truly is a need for ACH payments, and if so, how to implement them properly.
2. Choose the right payments processor
The next step is to sign up with a payments processor that supports ACH payments. Payment processors play a crucial role in managing ACH transactions by ensuring security, compliance, and seamless integration with banking and accounting systems, and platforms that operate as payment facilitators (PayFacs) can further streamline these transactions. It’s best to choose a provider that supports multiple payment options (i.e., credit cards, ACH, invoicing, etc.) from one solution. Doing so streamlines payment processing, and it also makes reporting and analysis easier, since you’ll be able to see the status of various payments under one platform.
For instance, if you want to monitor and manage settlement and funding status for ACH payments alongside your credit card transactions, you can do so if all your payments are handled through a single solution.
Stax is an all-in-one payment platform that allows for merchants to collect all manner of payments with transparent pricing and no contracts or hidden fees. Implementing this solution can increase convenience for the customer and lower costs for the merchant.
With Stax, businesses can accept payment through swiped cards, manually keyed payments, text-to-pay, mobile payment integrations, and, of course, ACH transfers. Payments are made simple, and the platform also provides data and analytics and financial reporting to better understand sales trends. These capabilities make Stax an affordable and convenient solution to accept all payment types without having to manage multiple payment systems.
Stax charges a monthly membership fee instead of pay by transaction model, making it ideal for businesses with a high-volume of transactions. The monthly membership fees depend on the capabilities a business enables and offer predictability in monthly costs and transparent pricing for payment solutions.
3. Figure out the logistics of ACH transfers in your business
You should also iron the steps you need to take to enable ACH payments. You have a number of options here, including:
- Using a virtual terminal. You can enter your customers’ account information into your virtual terminal, similar to how you would deal with keyed-in credit card transactions. This option is best used when taking payments over the phone or via mail order.
- Setting up online payments with an option to pay using ACH. If you’re conducting business online, you can add an option to take payments via ACH and ask customers to enter their account details. The specifics of this process will depend on the payment gateway you’re using, so check with your provider on how to enable ACH payments online.
When processing transactions via ACH, it’s important to ensure the secure handling of sensitive customer information and maintain compliance with industry standards.
Also read: What is an ACH return, and what should you do about it?
ACH transactions: Key takeaways
ACH transfers are a safe and convenient way to pay and offer significant cost savings for large transactions and recurring payments, especially when compared to credit cards and wire transfer fees. ACH payment acceptance provides businesses with a secure, cost-effective, and efficient way to process payments. With many options to choose from, deciding on the payment processing merchant is an important decision for any size business.
Considerations for the type of business, amount, type, and volume of transactions, and customer demographics will determine the best fit. Many providers offer several solutions, and finding the best fit for the business helps to manage costs and provides a streamlined and convenient experience for customers.
As technology advances, savvy consumers expect options to suit their needs. Offering a variety of payment options, including ACH transfers, is a safe and convenient way to better serve customers and grow business.
Learn how Stax can help your business accept ACH payments today.
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FAQs about ACH payment
Q: What is an ACH payment?
An ACH (Automated Clearing House) payment is an electronic transfer of funds between banks or credit unions across an ACH network. This payment system allows for the efficient transfer of money without the use of paper checks or credit card networks. ACH payments are often used for direct deposit payroll, recurring bill payments, large business-to-supplier transactions, and payments to and from the IRS.
Q: How does an ACH payment work?
Funds are moved from one bank account to another through the Automated Clearing House, a centralized system. The ACH network processes payments for nearly 24 hours each business day and settles transactions in four batches during the business hours of the Federal Reserve. There are two types of ACH transfers: ACH debit transactions, which usually take 1-3 business days to process, and ACH credit transactions, which typically take one day.
Q: What differentiates ACH payments from other payment methods?
Unlike credit card payments or wire transfers, ACH payments are usually less expensive, particularly for larger transactions. Moreover, ACH transactions are often favored for recurring and scheduled transactions, such as monthly bills or payroll, due to the reduction in human error and delays caused by processing paper checks.
Q: What are same-day ACH transfers?
Initiated in 2016 by NACHA, same-day processing of ACH transfers has been made available. To qualify for same-day processing, there are two submission deadlines for the originating depository financial institution (ODFI) to submit the transaction to the ACH operators. If met, the receiving depository financial institution (RDFI) will have the funds available on the same day.
Q: Are there limitations to ACH transfers?
Yes, ACH transfers are subject to limits that can be per day, per transaction, or per month, depending upon the bank’s rules. As per the National Automated Clearing House Association (NACHA), the same-day ACH dollar limit is increased to $1 million per payment as of March 18, 2022.
Q: How does one accept ACH payments?
To accept ACH payments in your business, consider the role of ACH payments in your business, and choose the right payments processor that supports ACH payments. Then, figure out the logistics of ACH transfers in your business, with options including using a virtual terminal or setting up online payments with an option to pay using ACH.
Q: What are the differences between ACH payments, wire transfers, and EFT payments?
An electronic funds transfer (EFT) refers to all types of digital payments, while ACH is a specific type of EFT. Wire transfers, on the other hand, are more costly and operate like electronic cashier’s checks, with funds being immediately withdrawn from the sender’s account. Wire transfers get cleared within the same day, can be done internationally, and are difficult to cancel once sent.
Q: What are the benefits of ACH payments?
ACH payments offer several advantages. They are generally less expensive than other payment methods, particularly for large transactions. They are highly convenient for recurring transactions and are safer than other methods since customers only need to share their banking information once. Also, they increase convenience for customers, likely making it a preferred option.
