Automated Clearing House (ACH) Wire Transfer, is an electronic form of sending funds from one bank account to another. ACH is also the banking system that supports your online banking transactions.
Table of contents:
- Two Types of ACH Transfers
- How Long Do ACH Transfers Take?
- ACH Fees
- ACH Wire Transfer – Frequently Asked Questions
- What is ACH Wire Transfer? – A Reliable Way to Send Funds
- Benefits of an ACH Transfer
It makes it possible for banks to credit and debit funds from a bank account, online. It is also the same system used by payment processors such as PayPal and Payoneer. Read on to discover how ACH wire transfer works.
Two Types of ACH Transfers
ACH transfers are grouped into two types – a debit transaction and a credit transaction. Each ACH transaction is one customer’s debit transaction, and another’s a credit transaction.
ACH Debit Transactions
In a debit transaction, a bank debits or “pull” funds from your account, and deposits them to another account. Such is the case when you pay your bill online. Your bank reduces your account balance by the billed amount, by taking out or “pulling” the billed amount from your account.
ACH Credit transactions
A credit transaction is the second step of an ACH transfer. In the example above, the billed funds will be “pushed” or credited into the utility company’s or service provider’s bank account. You have to provide your bank with the details of the receiver’s bank account, for it to “push” funds to it.
How Long Do ACH Transfers Take?
ACH transfers can take anywhere from one day to five business days. A business day is a bank’s working day, which excludes Sundays and national or public holidays.
Once you initiate an ACH transfer, your bank adds it to a queue of other ACH transfers. The bank then processes it along with other ACH transfers, in a batch.
While banks process the ACH transfers three times a day, they process credit and debit transfers at different speeds. These timelines are based on the rules provided by the National Automated Clearing House (NACHA).
NACHA requires banks to process all debit transfers within one business day and credit transfers within two to three days. NACHA also has a rule that says banks should process payments on the day they receive them.
Therefore, a sending bank can debit funds, and send them to a receiving bank within a business day. However, the receiving bank may choose to delay for a day or two, before it credits those funds.
That is why different banks transfer ACH funds at different speeds. It is also upon the bank to decide how much fees to charge for speeding up ACH transactions.
Most banks will not charge you any fees for receiving an ACH transfer. However, some will charge you a fee of either 0.01% or a fixed fee of $2 to $3 for making an ACH transfer. That makes ACH transfers the best for sending small sums of money or paying bills.
ACH Wire Transfer – Frequently Asked Questions
What Information Is Needed to Perform an ACH Transfer?
Just like other banking transactions, you need to provide your banking details. Those details include your Name, Routing/ABA number, account number, type of the receiving bank account (it can be a business or personal account), and the transaction amount.
You can make an ACH transfer from a regular bank account or from an ACH account. In most cases, you may not know the Routing/ABA number off the top of your head. However, if your account had check-writing privileges, you can find the Routing number at the bottom of the check.
Once you provide that information and initiate your transfer, your bank will confirm them. If they match what is in their systems, they will initiate the transfer, if they do not match, they will cancel the transfer.
Is eCheck the same as ACH?
An eCheck is the abbreviation for electronic checks, which is an electronic payment that replaces the traditional paper check. The term eCheck refers to the payment itself, instead of the process. In that regard, an ACH payment can be used interchangeably with eCheck, because an ACH process is used to complete the eCheck payment.
Furthermore, businesses can convert paper checks to eChecks, and then process the payment using ACH Transfers. However, businesses are required to inform their clients when they do that. To do that, they simply read the ACH transfer details from the paper check to convert them to eChecks.
An efficient and faster way is to use RPA software powered by AI and OCR to convert paper checks to eChecks automatically. Furthermore, eCheck takes about two to four days to process, instead of the 7 to 10 that paper checks take. They then forward the eCheck/ACH Payment to the merchant bank, who then forwards it to the Federal Reserve.
Is ACH Payment Safe?
ACH credits are safer than using credit or debit cards, as long as you do not authorize “push” payments to the account or malicious individuals. Third parties cannot initiate an ACH payment from your account without you giving them access to your online bank account.
However, ACH debits can be risky, because you authorize a third party to “pull” payments from your bank account when they are due. Fortunately, you can avoid losing your funds by only giving your bank account and routing number to reputable businesses only.
Overall, the risk of fraud is much less with ACH payments, when compared to debit and credit card transactions. For instance, only 3 out of every 10,000 ACH transactions get declined, because the account owner reported them as an unauthorized transaction.
How Do I Stop ACH Debit Charges?
You can stop ACH Debit Charges by calling the company, and informing them that they should stop taking further payments from your bank account, immediately. Next, you should call your bank account and tell them you have revoked that company’s permission to take automatic payments from your account.
Moreover, you can also bypass informing the company about the decision to revoke the payments and give your bank a “stop payment order” against the company in question. However, this is only a good practice when the next deduction is almost due, and you suspect ongoing fraud.
How is ACH Wire Transfer Different from a Standard Wire Transfer?
An ACH wire transfer is a type of transfer that is done within the country. It can only be done using a single currency (dollar). Also, it is more secure than your typical wire transfer. In addition, an account owner can perform an ACH transfer from their account to another person’s account within the same or different financial institution.
A standard wire transfer, on the other hand, is a type of transfer that is done across countries. In addition, different types of currencies can be used at a fee.
What are the Requirements for an ACH Transfer?
When performing an ACH transfer, three requirements must be met.
- A person is to use internet banking to send not more than $25,000 from a checking account.
- The account to which money is transferred is within an American bank.
- A daily limit of $125,000 has not been reached.
What is the Cost of an ACH Transfer?
An ACH transfer is mostly free. However, some banks may charge a small percentage.
How Do I Confirm the Transfer has been Processed?
When a user completes an ACH transfer, they can check the status of the transaction through the digital banking platform of their bank. Most banks have a status bar or section that highlights the status of a transaction. A transfer that has been processed will usually be indicated. However, transfers can take some time before they are processed.
What is ACH Wire Transfer? – A Reliable Way to Send Funds
ACH is a secure way to send and receive funds. As long as you have provided the right ACH transfer details, the receiving account will get the funds. The only way you can receive funds is to send them to the wrong person. Do you need to make an ACH transfer without charge? Contact us, we can help.
Benefits of an ACH Transfer
An ACH transfer has several advantages over other forms of transfers. These benefits are highlighted below.
- An ACH transfer is a convenient tool for making transactions. It allows an individual to make payments or send money to another person with relative ease. With this option, a person can make payments such as utility bills, mortgages, and much more. In addition, a payer does not have to mail in a cheque. All they need to do is to use a mobile app or a website to make payments. Also, a user does not have to spend on stamps. Likewise, an ACH transfer is one of the safest forms of payments a bank owner can make.
- The entire ACH transaction is fast. This process takes place within a day or two. It is usually faster when the sender and the recipient are banking with the same financial institution. It may take longer when the recipient account belongs to another bank. In most cases, an ACH transfer does not cost anything. If an individual has to pay something, it is usually not more than a few dollars.
- When compared with a conventional wire transfer, an ACH transfer is cheaper. A typical wire transfer can cost anything between $10 to $80. In some cases, it can be even more expensive. In addition, a wire transfer takes longer to reach the recipient’s account. There are instances in which a wire transfer can exceed 5 business days due to clearance issues. An ACH transfer hardly exceeds 2 business days.