What is an example of an ACH payment? (2024)

FAQs

What is an example of an ACH payment? ›

Direct deposits (an ACH credit often used for payroll) and automatic recurring payments (ACH debits for services like utilities) are common examples of ACH payments.

An Automated Clearing House or ACH transaction is an electronic transaction that requires a debit from an originating bank and a credit to a receiving bank. Transactions go through a clearinghouse that batches and sends them to the recipient's bank.

An ACH transaction is an electronic money transfer made between banks and credit unions across a network called the Automated Clearing House (ACH). ACH is used for all kinds of money transfers, including direct deposit of paychecks and monthly debits for routine payments.

An ACH file is a fixed-width, ASCII file, with each line exactly 94 characters in length. Each line of characters is known as a “record” and is comprised of various “fields” that are at specific positions within that line. In a properly formatted file, records must follow a specific order.

Your bank account details remain with your financial institution and are not sent to the payee. With ACH debit, you establish the transaction with the payee. In this situation, you submit your payment details (including account and routing numbers) to the payee.

How do you send an ACH payment? To send an ACH transfer, you'll need the account information of where you want to send the money. Once you have that, you'll submit the payment through your online banking portal or PayPal.

Basically, all Zelle payments are (instant) ACH payments but not all ACH payments are Zelle payments. The primary difference between Zelle and regular ACH payments is related to speed—whereas a standard ACH payment can take 2-5 days to clear, Zelle payments tend to clear in minutes.

Are ACH transfers reported to the IRS? The IRS doesn't count ACH transfers as cash, so they are not reported.

Do all banks allow ACH transfers? ›

Which banks allow ACH transfers? All banks in the United States can use ACH, as all that's needed to receive an ACH transfer is a valid bank account and routing number.

Debit Fee. The debit fee pays for a customer to make an ACH debit payment to a business. As mentioned above, this ACH debit fee typically costs between $0.20 and $1.50. The charge depends on the risk of the transaction and the type of business.

Basically, all Zelle payments are (instant) ACH payments but not all ACH payments are Zelle payments. The primary difference between Zelle and regular ACH payments is related to speed—whereas a standard ACH payment can take 2-5 days to clear, Zelle payments tend to clear in minutes.

Within the Direct Payment category, there are two main types of ACH transfers, known as ACH Credit and ACH Debit. The main difference between the two is whether the money is 'pushed' or 'pulled' between accounts.

When a bank account is connected directly to a user's Venmo account, Venmo uses ACH processing—bank-to-bank transactions—to drive the transaction. ACH also carries only a nominal flat fee. Because these fees are comparatively small, Venmo absorbs the costs as an incentive for more customers to join the platform.