ACH Transfer

How it works

ACH is a batch-processing network operated by NACHA (National Automated Clearing House Association) and run jointly by the Federal Reserve and The Clearing House. Originating banks collect transactions throughout the day, batch them, and submit the batches to one of the two operators. The operators sort transactions and forward each to the receiving bank, which credits or debits the appropriate accounts.

There are two flavors:

• ACH Credit — pusher initiates, like direct-deposit payroll or sending money via Zelle (for some banks).
• ACH Debit — puller initiates, like a recurring utility bill that automatically pulls from your checking account.

Settlement happens once or twice a business day, with same-day ACH available for an extra fee on certain transactions. Most consumer ACH transactions take one to three business days to fully clear, even though the receiving account often shows the funds sooner as a provisional credit.

Cost structure

ACH is the cheapest way to move money in the US. Transactions cost banks fractions of a cent each, and many consumer-facing services (Venmo, Cash App linking a bank account) are built on ACH and offer free transfers as a result. For businesses, ACH typically runs $0.20–$1.00 per transaction, vs. interchange fees of 2–3% on credit-card payments.

For comparison:

• Wire transfers — same-day settlement, $15–$30 per transfer, used for large or time-critical payments.
• Checks — slower (3–7 days for full clearance), more fraud-prone.
• RTP / FedNow — newer real-time payment rails, instant settlement 24/7, growing but not yet ubiquitous.

Reversibility and disputes

ACH is "reversible by exception": once settled, transactions can be reversed within specific windows for specific reasons — unauthorized debit (60 days for consumers), incorrect amount, duplicate transaction. This is meaningfully different from a wire transfer, which is generally final once executed. The reversibility makes ACH safer for consumers but less appropriate when finality is the point — real-estate closings and large business payments typically use wires for that reason.

Common touchpoints

If you've received a paycheck via direct deposit, paid a credit-card bill from your checking account, signed up for a subscription service, or moved money between brokerage accounts, you've used ACH. The "routing number plus account number" combo is the address ACH uses to direct funds.