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.

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.

ACH Wire Transfer

Two Types of ACH Transfers

ACH transfers are grouped into two types – debit transaction and a credit transaction. Each ACH transaction is one customer’s debit transaction, and another’s credit transaction.

ACH Debit Transactions

In a debit transaction, a bank debits or “pull” funds from your account, and to deposit 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 it.

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.

ACH Fees

Most banks will not charge you any fees for receiving an ACH transfer. However, some will charge you a fee or 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.

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? Contacts us, we can help.