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What is an ACH transaction?

An ACH transaction is an electronic money transfer made between banks and credit unions across a network called the Automated Clearing House (ACH).

ACH is used for all kinds of money transfers, including direct deposit of paychecks and monthly debits for routine payments. Businesses often allow you to pay bills via ACH by providing your account number and bank routing number. Some online payment services also conduct transactions via ACH, including online bill payment services through banks and credit unions.

Are ACH payments faster than other payment types?

It’s possible for ACH payments to clear quickly, even on the same day they are entered, on business days during business hours. That might not mean a transaction you make through ACH is completed on the same day you enter it. Because of the way ACH transactions are processed and because the network must guard against fraud and money laundering, payments can take days to complete.

Your bank or credit union might have a limit on the amount you can transfer, and they might charge you a fee for each transaction. ACH transactions can “bounce,” or be returned for nonpayment, if there is not enough money in the account.