• How the ACH System Works (US)
  • ACH Credits vs. ACH Debits

An ACH payment is an electronic transfer between US bank or credit union accounts over the Automated Clearing House (ACH) Network. It can be a credit, where the payer's bank pushes money to the payee (such as a direct deposit or a business paying a supplier), or a debit, where the payee pulls money from the payer's account with permission (such as a utility bill paid automatically). ACH is a US system, run under rules set by Nacha, with the Federal Reserve as one of the two national operators.

How the ACH System Works (US)

The Federal Reserve's FedACH page (last updated December 13, 2024) describes it this way: "The automated clearinghouse (ACH) system is a nationwide network through which depository institutions send each other batches of electronic credit and debit transfers." It adds: "The Reserve Banks and Electronic Payments Network (EPN) are the two national ACH operators."

Nacha, which governs the ACH Network, describes it in The ABCs of ACH (checked October 30, 2026) as "a payment system that reaches all U.S. bank and credit union accounts", and lists other names people use for these payments: "Also known as direct debit, EFT, electronic bank transfer and eCheck".

ACH Credits vs. ACH Debits

The Federal Reserve gives examples of each:

  • ACH credits: "The direct deposit of payroll, social security benefits, and tax refunds are typical examples of ACH credit transfers."
  • ACH debits: "The direct debiting of mortgages and utility bills are typical examples of ACH debit transfers."

For a small business, a client paying your invoice by bank transfer from their account is a credit. Collecting a payment from a client's account with their authorization is a debit.

How Long an ACH Payment Takes

Nacha's The ABCs of ACH says: "ACH payments can be processed in a matter of hours on the same business day, or scheduled the following day or two business days away." It also says: "The ACH Network is open for processing payments 23¼ hours every business day and settles payments four times a day."

Nacha also says when US ACH payments settle: "Payments are settled when the Federal Reserve’s settlement service is open (currently, the Federal Reserve’s settlement system is closed on federal holidays and weekends, and business days from 6:30 p.m. ET to 7:30 a.m. ET)." Faster options are covered in FedNow vs. RTP vs. ACH, and Same Day ACH (checked October 30, 2026) is Nacha's same-business-day service.

ACH vs. Card Payments

  • How it moves: ACH moves money between bank accounts. A card payment goes through the card networks and the card-issuing bank. See what is payment processing.
  • Who starts it: with an ACH credit, the payer sends it from their bank. With an ACH debit or a card payment, the business collects it, with permission.
  • Fees: fees depend on your bank or payment provider, so compare their published pricing. For card fee components, see how to reduce payment processing fees.

For figures on how much is paid by ACH and by card in the US, see payment processing statistics.

Worked Example: One ACH Payment for Two Invoices

These are sample figures with invented amounts and dates.

A client owes two invoices:

  • Invoice #2101: $1,200.00
  • Invoice #2107: $650.00
  • Total: $1,200.00 + $650.00 = $1,850.00

On Monday, June 8, the client sends one ACH credit of $1,850.00 from their bank and schedules it for the following business day, one of the options Nacha describes. When it arrives, you match the payment to both invoices: $1,200.00 to #2101 and $650.00 to #2107, leaving $0.00 owed. Ask clients to include the invoice numbers in the payment reference so the match is easy.

Getting Paid Through Billed

Billed's accept payments page describes card payments through Stripe, PayPal, and recording offline payments: "Billed integrates with Stripe to enable online payments on invoices." "Add your Paypal account to Billed to start accepting payments via Paypal on your invoices." "Keep track of all the payments from offline sources like checks, cash etc."

Related Guides

FAQ

What is an ACH payment?

An electronic transfer between US bank or credit union accounts over the ACH Network. The Federal Reserve says (FedACH page, last updated December 13, 2024): "The automated clearinghouse (ACH) system is a nationwide network through which depository institutions send each other batches of electronic credit and debit transfers."

How long does an ACH payment take?

For the US ACH Network, Nacha says "ACH payments can be processed in a matter of hours on the same business day, or scheduled the following day or two business days away." It adds: "Payments are settled when the Federal Reserve’s settlement service is open (currently, the Federal Reserve’s settlement system is closed on federal holidays and weekends, and business days from 6:30 p.m. ET to 7:30 a.m. ET)."

What is the difference between an ACH credit and an ACH debit?

With a credit, the payer's bank sends the money, as with a direct deposit of payroll. With a debit, the payee collects the money from the payer's account with permission, as with a utility bill paid automatically.

Share

Was this article helpful?