What Is an ACH Payment and How Does ACH Work? (2026)

ACH payments move money electronically between US bank accounts through the Automated Clearing House (ACH) network. Businesses use ACH for transactions such as payroll deposits and customer payments.

This article covers what ACH means, how payments work, and how businesses can accept them. 

What is the ACH?

ACH stands for Automated Clearing House. It’s the electronic network that transfers payments between US bank and credit union accounts, making it the backbone of electronic payments in the country. Nacha governs the network and sets its operating rules.

In the first quarter of 2026, the ACH Network processed 8.9 billion payments worth $24.1 trillion. Payment volume rose 4.8% year over year, while payment value increased 9.3%.

What are ACH payments?

These types of payments are electronic transfers processed through the ACH network. ACH payment meaning refers to money moving directly from one bank account to another through the network.

Common ACH payment use cases include:

• Direct deposits. Employers send wages to employees’ bank accounts.
• Bill payments. Customers authorize recurring payments to service providers.
• eChecks. Customers pay online using their bank account details.
• Account transfers. People move money between their own accounts at different banks.
• Business payments. Companies pay suppliers directly from their bank accounts.

Types of ACH payments

There are two main types of ACH transfers: ACH credit and ACH debit. Here’s a look at the differences between them:

ACH credit

ACH credit transactions involve the transfer of funds from the sender’s bank account to the recipient’s bank account.

ACH credit is used for:

• Direct deposit of payroll, Social Security benefits, and tax refunds
• Business-to-business payments
• Bill payments initiated by the payer

ACH debit

ACH debit transactions involve transferring funds from the recipient’s bank account to the sender’s bank account.

ACH debit is used for:

• Paying bills like utilities, mortgages, and loans
• Recurring payments like subscription and membership fees
• Business-to-business transactions initiated by the payee

For example, if you’re a US retailer on the Shopify plan, you can verify your bank account as a primary payment method for direct debits. Confirm with your bank whether your account supports ACH debits, or open a Shopify Balance account.

What are typical ACH processing times?

ACH payments can be processed within hours on the same business day or scheduled for the next business day. ACH credits may be scheduled up to two business days later. The network settles payments four times each banking day, but not on weekends or federal holidays.

Same Day ACH currently has a $1 million per-payment limit, although payment providers may charge an additional fee for the service. The limit will increase to $10 million on September 17, 2027.

How do ACH payments work?

The ACH network is an intermediary between financial institutions—allowing banks, businesses, and institutions to send money electronically. The ACH network organizes and processes a type of electronic funds transfer, known as an ACH transfer.

Here’s an example of how a direct deposit payment process using ACH works:

1. The originating party (in this case, the employer) initiates a payment, like its employees’ biweekly paychecks. Employees need to give the employer their checking account information (account number and routing number) to receive ACH transactions.
2. The originator’s bank (also known as ODFI, short for originating depository financial institution) batches the transaction along with other ACH bank transfers. These batched transactions are sent out at regular intervals during the business day.
3. An ACH operator (Federal Reserve or The Clearing House Payments Company) receives the batched transactions, sorts them, and submits them to the receiving depository financial institution (RDFI).
4. The receiving bank or credit union account processes the transaction and credits the receiving account (that of the employee).

All ACH transfers are categorized as either credit or debit transactions, depending on the action of the originating party.

Direct deposit, for example, is considered a credit transaction because the originating party moves money from their account to the recipient’s bank account, resulting in a debit from the originating account and a credit to the receiving account.

Direct deposit vs. direct payment

ACH transactions can be broadly classified into two main categories: direct deposits and direct payments.

• ACH direct deposits. In ACH deposits, funds are transferred from the originator’s account to a receiver’s account. They are used for payroll, government benefits, interest payments, and tax refunds.
• ACH direct payments. These are transactions that are transferred from a payer’s account to a payee’s account to make payments or settle bills.

Direct payments are often used in business-to-business (B2B) transactions, such as making payments to suppliers or transferring funds between business accounts.

ACH vs. wire transfer (and EFT): what’s the difference?

ACH transfers cost less and take longer than wire transfers. Wire transfers process faster and are more widely available for international payments. 

EFT stands for electronic funds transfer. It describes any payment that moves electronically rather than through cash or a paper check, including ACH and wire transfers. The table below explains the differences between these payment terms. 

ACH works well for scheduled or recurring payments when the sender does not require immediate settlement. Banks process ACH transfers in batches, which keeps fees low. Same Day ACH speeds up the transfer, although the payment still moves through scheduled settlement windows.

Wire transfers are for speed and finality. Domestic wires generally arrive the same business day. They are also the more common option for sending money abroad. 

How much does it cost to use and accept ACH payments?

ACH payment fees can be calculated in several ways—either as a flat fee per transaction, a percentage of a transaction, or a monthly cost. Businesses that process ACH payments through their bank rather than a third-party payment processor will pay the fees set by their financial institution. Transfers such as bill payments, payroll direct deposits, and direct payments are often free of charge.

Small business owners may also choose to work with payment processors (such as Shopify Payments, PayPal, Stripe, or Square) to process business-to-business and business-to-consumer transactions. In this case, the third-party payment processor determines the cost of the transaction, with typical ACH transfer fees ranging from 0.8% to 1.5% of total transaction cost.

How to accept ACH payments as a business

Accepting ACH payments requires an ACH-enabled payment provider, a business bank account, and permission to debit each customer’s account. The setup process usually follows five steps:

1. Choose an ACH payment provider. Your bank, payment processor, or ecommerce platform may offer ACH payments. Compare processing fees, payment timing, and return fees.
2. Verify your business. Complete the provider’s identity checks and connect the bank account where you want to receive funds.
3. Add ACH as an option at checkout or on sales invoices. Shopify stores can useACH Direct Debit through Shopify Payments for eligible B2B orders. The store must accept USD, have more than 100 fulfilled orders, and meet Shopify’s verification requirements.
4. Collect customer authorization. Customers must approve the debit and verify their bank account. Shopify handles this through a secure checkout interface.
5. Set rules for pending and failed payments. Shopify ACH payments can remain pending for up to four business days. Set a policy for when orders enter fulfillment and how your team handles failed payments.

To activate ACH Direct Debit in Shopify, go to Settings > Payments. Select Manage under Shopify Payments, then open Manage Payment Methods and activate ACH Direct Debit. The option applies to online B2B orders and is not available through Shopify POS.

Pros of ACH

Cost

A business does not pay a credit card processing fee when a customer pays by ACH. The ACH provider may charge its own processing, return, or dispute fees—and whether it costs less depends on the provider’s rates.

For example, assume a card processor charges 2.5% on a $10,000 payment. The fee would be $250. If the sale produces $3,000 in profit before processing fees, that charge reduces the profit by 8.3%.

Security

To keep the transaction secure, ACH debits require authorization from the account holder. Payment providers may also verify the customer’s bank account before processing the debit. With Shopify Payments, for instance, B2B customers authenticate their bank account through a secure checkout interface.

However, it’s worth noting that ACH payments are not risk-free. Debits may fail because of insufficient funds, and customers may dispute a transaction through their bank. 

Convenience

ACH works for one-time and recurring payments. Once a customer authorizes a recurring debit, the provider can submit future payments on the agreed schedule. ACH credits can also handle direct deposit payroll.

This setup removes the need to enter each payment manually, which makes it especially convenient for recurring transfers. 

Cons of ACH

Processing times

ACH payments are processed in batches rather than instantly. According to Nacha, payments may process within hours on the same business day or on the next business day. ACH credits may be scheduled up to two business days later.

The payment provider may take longer to confirm the result. Shopify ACH Direct Debit payments can remain pending for up to four business days. If a provider advertises instant access, check whether it is advancing the funds before the ACH payment settles.

Limited international availability

ACH is not limited entirely to US payments. ACH may be used to send payments abroad, however, availability depends on the bank, provider, and destination.

Wire transfers cover more international routes. Businesses may require a wire transfer if their ACH provider does not process payments to the recipient’s country.

Transaction limits

Banks and payment providers may set daily or per-transaction ACH limits. Same Day ACH also has a network-wide limit of $1 million per payment. That limit will rise to $10 million on September 17, 2027.

Regulation D no longer imposes a federal limit of six monthly transfers from savings accounts. The Federal Reserve removed that limitation in 2020, although individual banks may retain their own account restrictions.