You have several options when you need to send or receive money quickly. One of these options is the Automated Clearing House (ACH) payment, a popular method of moving money between two accounts – often within the same day.

ACH payments help consumers get paychecks and other payments securely at the bank of their choice. So, what makes it different than other digital payment methods?

Learn how ACH payments work, when they should be used, and why they are becoming increasingly common for everything from paying the mortgage bill to receiving your tax refund.

What Is An ACH Payment?

An ACH payment is a method of electronic payment that takes place between two banks within the Automated Clearing House network. It’s an alternative to other digital payments, such as wire transfers or card payments. It has gained in popularity over the years, even as the use of checks and cash between businesses and consumers has declined[1]. Sometimes, ACH payments are also called ACH transfers or ACH transactions.

The ACH network includes U.S. banks and its territories.

How Does An ACH Payment Work?

ACH payments are completely electronic, either as a direct deposit (credit) or a direct payment (debit).

The flow of money works like this:

  • The originator (such as your employer) initiates the payment or deposit by giving instructions to their bank.
  • The bank sends digital payment files to the ACH network.
  • The ACH network passes those payment files on to the receiving bank.
  • The receiving bank then adds money or takes money from the receiver’s bank account – depending on the type of ACH transaction that was initiated.

Typically, when a customer pays a bill, it’s a direct payment or debit from their account. When money moves from an employer, business, or government agency to a consumer, it’s referred to as a direct deposit or credit to their account.

Each ACH payment moves through the ACH network and gets processed by either a private business, the Clearing House Payment Company, or the U.S. Federal Reserve[2]. These two organizations work together to process payments in the U.S.

The type depends on which side of the payment you are sitting on and whether you initiated it.

Here are two examples:

Pushed money: You receive your weekly paycheck for work as an ACH deposit. You gave your employer permission to pay you this way, but the payment happens without your taking action each week. The employer "pushes" the money to you when it's time to pay you. This is an ACH credit.

Pulled money: You owe $400 on your income taxes and choose to have it paid directly from your checking account. You provide your account number details and authorize that $400 to come out of your account. The money is being “pulled” from your account, so it is an ACH debit.

ACH Payments Vs. Wire Transfers

ACH payments have a lot in common with wire transfers. They are both quick, convenient, and digital. However, they are not the same and have unique features.


ACH payments are almost always used for payments between U.S. banks and those in the U.S. territories. Meanwhile, wire transfers depend on the bank and services offered. They can be done between parties around the world, except for countries under U.S. sanctions.


Around 80% of ACH payments are settled on the same day but are almost always completed in one to three business days[3]. Wire transfers can happen within the same day (or even a few hours), depending on when it was initiated and can take up to a week or more.


While some banks charge customers an ACH fee as part of bill-paying services, they almost never charge for incoming ACH payments such as your weekly paycheck. Wire transfer fees are set by the banks or companies that handle the transaction and vary by type of service, such as a domestic vs. international wire transfer.


How much can you send with an ACH payment or wire transfer? It depends. Both wire transfers and ACH payments are subject to limits, and these vary by bank. Same-day ACH payments currently have a $ 1 million limit per transaction[3].


It's possible to reverse an ACH payment or have the money sent back to the original account. This is usually only available for errors in sending (wrong person, wrong amount, etc.)[4]. Money sent with a wire transfer isn’t likely to be returned for any reason. If the receiving bank and account holder has claimed the money, it will prove difficult (if not impossible) to retrieve those funds.

How Long Do ACH Transfers Take?

ACH transfers sent on a business day and before the last batch is processed may be credited the same day. The majority of ACH payments are same-day payments. However, this doesn’t guarantee you’ll always receive your money on the same day.

If the money was sent on a non-banking day such as a weekend or holiday--or there wasn’t enough time before the last batch of the day was sent--it may be credited the following day. Some senders may choose to schedule an ACH payment for a later day, as well. This will delay the money until they are ready to have it come out of their account into yours.

Are There Costs Associated With ACH Payments?

The ACH payment system charges an annual fee to participating banks and credit unions for the privilege to send and receive ACH payments. On top of that, there’s a fee per transaction[5].

Your bank or credit union may or may not choose to pass this cost on to you. To know how much sending or receiving through ACH will cost, inquire with your bank directly.

Are ACH Transfers Secure?

ACH transfers are very safe and follow the latest in financial technology requirements. While these secure and fast payments make it easier for consumers to pay bills and receive funds when needed, they also make it easier for criminals to exploit the system[6].

How do they do this? By persuading consumers to send payments through the ACH network. Criminals can impersonate legitimate businesses and hiring companies, then convince a victim to send an ACH payment. Because the victim willingly sent the money, it can be challenging to retrieve.

The ACH network works with banks to identify suspicious payments before they cause harm. Bank customer education is also a big part of keeping these incidents from happening and is something they are focused on doing more of in the future.

When To Use ACH Payments

There are many ways to send money today. You can still write checks, transact with cash, and use wire transfers to keep up with financial responsibilities. However, ACH payments are so common that you may not even realize you use them daily.

For example, when you set it up so that your health insurance payment comes directly from your checking account, you use ACH. Also, whenever you have a tax refund or child support payment deposited into your account, you use ACH. Some peer-to-peer payments, such as PayPal® or Venmo®, access the ACH network when you send or receive money.

ACH is particularly useful for recurring payments where you don’t want to write a check or make a separate online payment each time. If you worry about late fees or don’t want to forget to pay, ACH can take the hassle out of keeping tabs on bills.

Finally, ACH is one of the better ways to access your money quickly. Instead of waiting for a paycheck to arrive in the mail, then take it to the bank and wait 2-3 days for it to be credited, you can opt for ACH. Your employer can put the money directly into your account when it’s time to be paid, saving you worry that it will arrive in the mail on time.

Is ACH The Future Of Money?

ACH isn’t new. In fact, it’s been around for decades. With recent improvements to the process, including faster transfer times, it’s worth considering for both paying bills and receiving money.

U.S. customers made 14.56 billion ACH payments in 2022 for their bills, including those made over the phone and online[7].

This is a growth of over 5% from the year before and proof that it’s gaining in popularity.

Are you ready to learn more about ACH options? Contact PNC bank for more information on the services available to you.