What is an ACH Payment?
ACH payments – also called ACH (bank) transfers – are an electronic method of moving money from one bank account to another. ACH payments are very commonly used in the US, when sending money in dollars from one account to another – whether that’s paying a bill, getting your salary, or passing some money over to a friend. Some banks also let you send international ACH transfers.
We’ll cover all you need to know about ACH payments in the US and how it’s possible to send international ACH transfers in this guide. We’ll also touch on alternative ways to send money online with providers like OFX and Wise.
- What is an ACH payment?
- Can you send ACH transfers internationally?
- International ACH transfers
- Alternative ways to send money online
- How to make an ACH transfer
- How to make an international ACH transfer
- ACH transfer pros and cons
- How much do ACH payments cost?
- How long do ACH payments take to process?
What is an ACH payment?
Let’s start with the basics. ACH payments are bank to bank electronic transfers, which are processed through the Automated Clearing House system – hence the name, ACH. ACH payments are organized by NACHA – the National Automated Clearing House Association.
Even if you’ve never heard of an ACH payment you’ve almost certainly received one. ACH payments are the preferred method of sending direct deposits such as employer payroll, government payments and benefits, and even IRS rebates.
ACH payments are also regularly used by banks, so if you make electronic transfers using your online banking system, or set up recurring payments to cover loans or mortgage payments for example, you’re probably using the ACH system there too.
Types of ACH Payments: Direct Deposit vs Direct Payment
In broad terms you can split ACH payments into direct deposits and direct payments.
Direct deposits: Usually made from a company or organization to an individual
Direct payments: can be made by individuals, companies or organizations.
If you’re arranging bank to bank transfers within the US online using your own bank’s system you may not even know you’re setting up an ACH payment – but as this is one of the cheapest and easiest options for domestic transfers, it’s probably the default your bank offers.
Common places direct deposit ACH payments are used include:
- Payroll – 93% of US employees get their salaries via ACH direct deposit
- Government payments which are made to large groups of people are usually via ACH
- ACH is used for annuity payments, or interest payments from investments and savings
- The IRS uses ACH payments when it distributes tax rebates
You’ll also often use direct payments – here are some examples:
- Sending money with Venmo or Zelle? That’s probably an ACH payment
- Many low cost or free domestic transfers made using online banking are ACH payments
- Recurring payments made from a personal bank account to a company often use the ACH network
- Online bill pay usually uses ACH payments
Can you send ACH transfers internationally?
It is technically possible to use ACH payments to send money overseas. However, not all banks offer this service to their customers. Depending on your own bank you may need to use a wire transfer instead when sending a payment internationally.
An alternative is to send your transfer using a third party provider like Wise or OFX. In this case you can often pay the provider locally in USD with an ACH (bank) transfer, and the provider will then deposit the money into your recipient’s account in the destination country. More on that later.
International ACH Transfers
If your bank offers international ACH payments as an option, it’s worth weighing up whether this will come with lower fees compared to the alternative payment options available. Banks usually prefer to offer customers international wires – we’ll look at how these work shortly – which can be pretty expensive to arrange, and may not have the best exchange rates available.
Alternative Ways To Send Money Online
ACH transfers aren’t the only option. Depending on where you’re sending money to, and what payment features are most important to you, you may find an alternative way to send money online suits you better. Let’s look at some popular options – OFX, Wise and WorldRemit – and how the measure up on features:
| Feature | OFX | Wise | WorldRemit |
|---|---|---|---|
| International transfer fees | No fee | Variable fee based on destination and payment type | Variable fee based on destination and payment type |
| Exchange rates | Exchange rates include a markup on the mid-market exchange rate | Mid-market exchange rate | Exchange rates include a markup on the mid-market exchange rate |
| Payment options | Pay by bank transfer Have your money deposited into the recipient’s bank account | Pay by bank transfer, credit or debit card Have your money deposited into the recipient’s bank account | Pay by bank transfer, credit or debit card Have your money deposited into the recipient’s bank or mobile money account, or collected as cash |
| International transfer speed | 1 – 2 days | 50% of payments are instant | Can be instant for cash collections |
| Safety | Fully regulated in the US and everywhere else they offer services. | Fully regulated in the US and everywhere else they offer services | Fully regulated in the US and everywhere else they offer services |
| Best for | Customers who want to talk through their payment by phone – 24/7 support offered | Low cost payments with the mid-market exchange rate | Great range of payout options |
As you can see, alternative online providers can be a good option – particularly if you want to send money overseas and your own bank doesn’t offer international ACH transfers. Here’s a summary of the providers we picked out to review:
- OFX: Send payments in 50+ currencies, with 24/7 phone support if you’d rather talk through your options and pay by phone
- Wise: Send payments to 80+ countries with the mid-market exchange rate and fast delivery times
- WorldRemit: Great range of pay out options including cash collections which makes this a popular way to send money home to loved ones
How to Make an ACH Payment
The process for making an ACH payment will vary a little depending on your own bank’s online or mobile banking system. However, the basic steps are usually the same:
- Log into your online banking service
- Select the options to make a domestic transfer or pay a bill
- Follow the prompts to enter the recipient’s name, bank account number and routing number
- Confirm the amount you want to pay, and whether the payment is one off or recurring
- Check everything over and confirm to complete the transfer
Information Needed for ACH Transfers
Exactly what you need to send your ACH may depend on your own bank’s processes – but you’ll normally have to provide:
- Recipient’s name
- Recipient’s address
- Recipient’s bank name and account number
- Recipient’s bank routing number
How does ACH payment processing work?
ACH payments are initiated and then processed by the clearing house at various stages throughout the day. The ACH network operates almost 24 hours a day during the working week, with standard payments processed 4 times a day, and same day payments processed at 3 points every day. ACH payments are not processed over weekends or public holidays.
Once the payment has been processed by the clearing house it is usually available for the recipient very quickly – although the exact process does depend on the recipient’s own bank’s system.
How to Make an International ACH Transfer
Here’s a quick step by step guide to making an international ACH bank transfer – before you get started you’ll need to double check your own bank offers this service as it’s not universally available from major US banks:
Step 1: Get your recipient’s details
Before you get started you’ll need to make sure you have everything that’s required to set up your international ACH. Usually that’ll include:
- Recipient’s name
- Recipient’s address
- Recipient’s bank name
- Recipient’s IBAN or account number
- Recipient’s bank routing information – this varies by country
Routing information will vary depending on where you’re sending the payment to – for example the UK uses sort codes, while for payments to Australia you’d need a BSB number. These codes and numbers work like ABA routing numbers in the US.
Step 2: Log into online banking
If international ACH payments are available for you, the most convenient way to set one up is likely to be online. Log into your regular service and look for payments, or global payments to see if you can send an international ACH with your bank. If you can’t send an international ACH it may be worth looking at alternative providers to see if a third party service can help you send money overseas for a lower price than a bank wire.
Step 3: Enter the transfer details
Add the amount you want to send and the currency it should be received in. You’ll also be prompted to enter the recipient’s personal information and bank details, and add a message or reference so they can see who the transfer is from.
Step 4: Check everything and confirm
It’s common to need to complete a security or verification step here- your online banking service will guide you through if this is required.
ACH payments pros and cons
ACH Pros | ACH cons |
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How much do ACH payments cost?
It’s free to receive an ACH payment, so your bank or credit union won’t charge you for getting your salary paid by direct deposit for example. It’s also usually free or fairly cheap to send ACH payments or pay bills by ACH – check your own bank’s policy on this.
In some cases account holders can make a certain number of free ACH payments per month before fees apply, so knowing the fees and limits associated with your account is essential.
Here are the ACH payment fees for a few major US banks:
| Bank | ACH fees |
|---|---|
| Bank of America | 3 Day ACH (consumer) – 3 USD fee Next day ACH (consumer) – 10 USD fee |
| US Bank | No fee |
| Wells Fargo | No fee (ACH payments processed via Zelle) |
International ACH Transfer Costs
Very few US banks offer international ACH payments – if yours does it’s worth asking them directly what their fees are. Here’s a quick reminder of the fees for international payments funded using an ACH, with the specialist services we looked at earlier:
OFX: No transfer fee, just a low markup added to the mid-market rate
Wise: Low transfer fees with no markup on the exchange rate
WorldRemit: Varied fees based on payment type and destination
How long do ACH payments take to process?
ACH direct deposits can be set up as same day, next day or 2 day payments, while the ACH payment processing time can mean money is received on the same day or next day.
That means for example, that an employer can schedule payroll 2 days in advance to be sure that employees will get their money first thing on payday.
Here’s how the providers we looked at earlier measure up on delivery times for international payments:
OFX: 1 -2 days
Wise: 50% of payments are instant
WorldRemit: Cash collection payments can be instant
What’s the difference between international ACH vs wire transfer?
While ACH payments and Wire transfers are both ways to move money from one bank account to another, they do both have different features, fees and benefits to consider. Here’s a rundown:
| International ACH | Wire transfer |
|---|---|
| Not commonly available | Most banks offer wire transfers |
| May not be processed instantly | Usually processed instantly |
| Fees may be lower | Fees can be on the high side |
| Usually preferred for payments where economy is most important | Usually preferred for payments where speed is most important |
International wire transfers
International wire transfers are often used when making international payments through traditional banks, too. In this case the fees used can be especially high – both for the sender and the receiver.
Depending on how the payment is processed, international wires may also involve currency conversion fees and third party costs.
Wire payments – features and benefits
While bank wire transfers can be costly, they are a smart choice under some circumstances. Here are some benefits of wire payments:
- Immediate processing – good for when a payment needs to arrive quickly
- A wire payment can only be processed if the funds are available in the sender’s account – the money can be quickly released once it arrives
- Wire payments can not usually be reversed once initiated
- International wire transfers are usually the standard offer for sending money overseas with a traditional bank
- Higher fees make wire transfers more popular for one off, high value transfers
Conclusion: What is ACH?
ACH payments are extremely commonly used in the US for everything from sending money to a loved one to paying your electricity bill. Often if you’re setting up a payment locally through your bank you’ll be making an ACH – even if you don’t know it.
International ACH payments are theoretically available – but in practice very few US banks offer ACH payments across currencies. However, providers like OFX, Wise and WorldRemit can offer a neat solution. Set up your international payment with an alternative provider like OFX, Wise or WorldRemit, to pay in USD using an ACH (bank) transfer, and have your money deposited into your recipient’s account overseas. That can cut the costs versus using a bank international wire – and may also be faster than a regular wire, too.
ACH Payments FAQ
What is needed for an ACH transfer?
You’ll usually need to provide:
- Recipient’s name
- Recipient’s address
- Recipient’s bank name and account number
- Recipient’s bank routing number
How long does an ACH transfer take?
ACH transfers may take a day or two to arrive, depending on the ACH service your sender has used.
How do I receive an ACH payment?
To receive an ACH payment you’ll just need to give the sender your banking details including your account and routing number – the money will then be deposited right into your account.
How do I check my ACH transfer status?
Log into your online or mobile banking to check on your ACH transfer status most easily.
