By: Andy Hewitt,

At Dwolla, building the ideal API to move money is what we do, but without the Automated Clearing House (ACH) Network, none of it would be possible. ACH is what allows for the electronic transfer of funds between banks to take place in the United States. According to the National Automated Clearing House Association (NACHA), the self-regulatory body responsible for governing the ACH network, there were more than 25.5 billion ACH transactions in 2016 alone.

Whether you’re processing payroll or monthly recurring payments, ACH is there to make it happen. If you’d like to take an even deeper dive into all things ACH, take a look at our comprehensive beginner’s guide to ACH. In the meantime, this post will help you get a better grasp of what is taking place for ACH credits and ACH debits during an ACH transaction.

Here’s how it all happens:

What is the ACH debit process?

Let’s imagine that you’re setting up an automatic monthly payment for your car payment. To begin, you’ll provide that company with your checking account information and authorize it to withdraw funds from your account for the payment each month. When the due date rolls around, a new ACH entry is created by the lender’s bank. That entry is then sent to your bank, which debits your account for the amount of the due payment. The ACH entry is then credited to the lender’s bank and the transfer of funds is complete.

What is an ACH credit?

When you’re on your bank’s website there’s a good chance that you have seen a ‘pending ACH credit’ listed on a statement entry line. One of the most common pending ACH credits that people encounter is through the employer’s direct deposit. Think of an ACH credit as money coming to you, rather than being deducted from your account.

How long do ACH credits and debits take?

Both ACH credits and debits can only take place on days that banks are open, and typically take several days to process. While ACH payments are not real-time like wire transfers, NACHA is implementing Same Day ACH in phases to address the speed of ACH credits and debits.

NACHA has rules that these timelines were created based on, but it is important to note that once the receiving bank gets the money, there could be a holding period, making the total delivery time vary.

More questions on ACH? Check out this blog to learn more about ACH.

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Financial institutions play an important role in the Dwolla network.

Dwolla, Inc. is an agent of Veridian Credit Union and Compass Bank and all funds associated with your account in the Dwolla network are held in pooled accounts at Veridian Credit Union and Compass Bank. These funds are not eligible for individual insurance, including FDIC insurance and may not be eligible for share insurance by the National Credit Union Share Insurance Fund. Dwolla, Inc. is the operator of a software platform that communicates user instructions for funds transfers to Veridian Credit Union and Compass Bank.