How Does an ACH Transfer Work?

You go to your bank and provide the recipient’s name, bank account information, and any other information your bank requests. In total, approximately 8.2 billion ACH payments totaling $20.7 trillion were processed in the first quarter of 2024. For ach transfer doctors and doctors-in-training, choosing the right method for transferring funds—whether for practice operations or personal financial needs—can impact timing, cost, and security. If you want to avoid having a missed payment damage your credit score, put all of your bills on autopay with ACH. That’s because banks often must verify that sizable transfers are legitimate.

1-3 business days; 3 or more business days for transfers initiated at the bank where the funds should arrive. NACHA rules ensure that banks can process payments the same day they’re sent, but it’s up to each bank whether it charges you for expediting a payment. Remitly is on a mission to make international money transfers faster, easier, more transparent, and more affordable. Since 2011, millions of people have used Remitly to send money with peace of mind.

Deadlines for sending money tend to be later in the day and evening. On the other hand, wires are often used when working with tight deadlines or large amounts, such as with real estate transactions, car purchases, or federal tax payments. For an ACH transaction to be processed, sufficient funds must be in the account. Otherwise, the payment or transfer will be returned, which could trigger a fee. Also, ACH transfers can take longer to complete due to anti-fraud protections.

Penalty for frequent transfers from savings

ACH is most commonly used for domestic cash transfers within the U.S., in or on a U.S. military base, U.S. embassy, and U.S. territories (Virgin Islands or American Samoa). Some international ACH transactions (IATs) may be possible depending on your bank or destination, but they’re not yet widespread. If you’re wiring $15 or more to a foreign account from the U.S., this is known as a remittance transfer.

Downsides to an ACH Transfer

• Banks and credit unions may have different offerings or methods for transferring cash, particularly internationally.
• For example, Fidelity’s wire transfer limit is $100,000 per day.
• For example, you may be asked to send your down payment funds via wire transfer if you’re buying a home.
• This method is often used to transfer money for a same-day arrival, but the expedited service comes at a premium.
• The settlement of a transaction, or the transfer of funds from one bank to another via the ACH Network, generally happens the next day after it is initiated.

To find out the best deal for your money transfer, the best place to go is our simple money transfer comparison tool. This option is good for paying bills online, though you may need to pay a card processing fee. In many cases, the amount you send will impact the rate, with larger transfers costing more. However, some banks charge a flat rate, regardless of the amount sent. If you and your recipient have bank accounts with the same institution, your transfer will likely go through quickly. In some cases, your recipient may see the funds posted to their account immediately.

Banks and credit unions may have different offerings or methods for transferring cash, particularly internationally. In simple terms, the originator or first bank initiates an ACH transfer, which is grouped with other ACH transfers. Once transfers are processed for the day, they’re sent in batches to the receiving bank. The receiving bank then credits or debits the appropriate accounts accordingly. Both wire transfers and ACH transactions are used to facilitate the movement of money. ACH is also for domestic transfers whereas international transfers are done by wire transfers.

ACH vs Wire – ACH is cheaper, but wires are quicker

It’s not uncommon for consumers to use wire transfers to make hefty one-time payments that require same-day processing for transactions related to real estate. But be mindful that same-day limits on fund transfers may apply. A wire transfer is an electronic money transfer from one financial institution directly to another, without a third party. This method is often used to transfer money for a same-day arrival, but the expedited service comes at a premium. Fees run the gamut because banks can choose how much to charge, subject to any state restrictions. It’s possible for ACH payments to clear quickly, even on the same day they are entered, on business days during business hours.

To do so, you’d need to visit a non-bank wire transfer company in person and pay with cash. For many people, the biggest downside of ACH transfers is the time it takes for funds to post to an account. If you’ve ever kept an eye on your bank account waiting for your paycheck to appear, you understand that this can feel like a very long time. Bankrate.com is an independent, advertising-supported publisher and comparison service.

In general, ACH refers to a system that can electronically move funds between bank accounts for various types of transactions, including deposits, withdrawals, and transfers. When it comes to ACH direct deposits, they’re commonly used for employee payroll. ACH transfers are transfers of funds using the ACH Network to move money from an account at one financial institution to another. Examples of ACH transfers include getting your pay through direct deposit or paying your bills online through your bank accounts. A wire transfer is a direct bank-to-bank transfer that allows money to be sent in real time. Unlike ACH transfers, wire transfers don’t use a batch processing system and are typically handled individually, which contributes to their faster processing speed.

An alternative to ACH transactions

Banks and third-party payment apps, such as Venmo, PayPal, and Zelle rely on ACH to move money between friends and family or, in some cases, pay bills. ACH has also been embedded in many high-profile fintech payment apps, such as Stripe, for consumer-to-merchant and for business-to-business payments. There are some potential drawbacks to keep in mind when using them to move money from one bank to another, send payments, or pay bills. ACH transfers have many uses and can be more cost-efficient and user-friendly than writing checks or paying with a credit or debit card. ACH payments can be made online through your bank’s or credit union’s website or mobile app. Sometimes you can pay a bill by ACH transfer; you’ll need to provide the merchant (on its website or in its app) with your bank’s routing number and your account number to do this.

If you’re looking for the right bank for your needs, Panacea offers free ATM use nationwide, high savings rates, and 24/7 support. Learn more about personal and business banking with Panacea Financial. Most ACH transfers happen domestically, although more banks now offer international ACH services. If you’re sending an ACH transfer, you’ll need to provide your recipient’s name, bank routing number, account number, and the total amount you want to transfer.

Wire transfers are very fast, but costly, and ACH transfers are much slower, but have very low fees. Because a wire transfer is direct, it can be cleared within minutes, making it the faster way to send money. However, wire transfers can be costly, with banks charging both the sender and the recipient. Fees can range from $0 to $50, which can add up if you regularly transfer funds. However, specifics can vary greatly by account type and financial institution.