What Is an ACH Payment, and How Does It Work?
ACH stands for Automated Clearing House, which is a financial network in the United States that’s used for electronic money transfers.
ACH payments, also known as "direct payments," are a method of electronic funds transfer from one bank account to another without using paper checks, credit or debit card networks, wire transfers, or cash.
Since first being established, ACH transfers have grown in usage and popularity—according to Nacha.org, there were 7.7 billion ACH transactions within the first quarter of 2023.
ACH transfers are common and familiar to most consumers, even if they aren't aware of the lingo. If you pay your bills electronically (rather than writing a check or entering a credit card number) or get a direct deposit from your employer, the ACH network is likely at work.
ACH transfers are increasing in popularity among businesses, too. In fact, B2B ACH payment volume increased by 15.5 percent from 2021 to 2022. ACH payment transfers are faster and more dependable than checks, allowing them to be automated and streamline accounting.
In general, ACH transfers cost less to process than credit card payments or wire transfer. The savings may be significant if you accept recurring payments as a business. (If you still want to accept credit cards, find out how to avoid credit card processing fees.)