ACH (Automated Clearing House)
The Automated Clearing House (ACH) is an electronic network that processes financial transactions in batches across U.S. banks. It handles direct deposits, bill payments, business-to-business payments, and government transfers — moving trillions of dollars annually.
Automated Clearing House Definition
The Automated Clearing House (ACH) is an electronic network that processes financial transactions in batches across U.S. banks. It handles direct deposits, bill payments, business-to-business payments, and government transfers — moving trillions of dollars annually.
Automated Clearing House in Practice
A small business sets up payroll through ACH. Every two weeks, the payroll system sends a batch of payment instructions to the ACH network. Each employee's bank receives the funds, and paychecks land in accounts by morning — no paper checks needed, no processing fees per employee.
Why It Matters
ACH is the backbone of routine payments in the U.S. It's cheaper than wire transfers (often free or under $1), more efficient than paper checks, and handles everything from your mortgage payment to your Netflix subscription.
For businesses, ACH reduces payment processing costs dramatically compared to credit cards. Accepting ACH payments instead of cards can save 2-3% per transaction — which adds up fast at scale.
FAQ
Q: How long do ACH transfers take?
A: Standard ACH takes 1-3 business days. Same-day ACH is available for an additional fee and settles within hours.
Related Terms
> Holdings offers free business checking with 1.75% APY. Open a free account →
Related Terms
A SEP IRA (Simplified Employee Pension Individual Retirement Account) is a retirement plan designed for small business owners and self-employed individuals. It allows you to contribute up to 25% of compensation or $69,000 (2024 limit), whichever is less, for yourself and any eligible employees. Cont
A bond is a loan you make to a government or corporation. When you buy a bond, you're lending money to the issuer in exchange for regular interest payments and the return of your principal at a set maturity date. Bonds are considered lower-risk than stocks and are commonly used by businesses to park
A stop payment is an instruction you give your bank to cancel a check or scheduled payment before it's processed. It prevents the funds from leaving your account, effectively voiding the transaction. Banks typically charge a fee of $15–$35 for this service.
A standing order is an automatic, recurring bank transfer that moves a fixed amount of money from your account to another account on a regular schedule. You set it up once, and the bank automatically processes the transfer — weekly, monthly, quarterly, or annually — until you cancel it. Standing ord