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When Dwolla set out to build the ideal platform to move money, we knew the Automated Clearing House (ACH) Network was the key.

The ACH Network 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 21 billion ACH transactions in 2017 alone, moving more than $46 trillion.

Whether you’re processing payroll or monthly recurring payments, ACH is there to make it happen.

Want to learn more about ACH? If you’d like to take an even deeper dive into all things ACH, use our beginner’s guide to ACH or read our ACH 101 ebook.

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.

What is an ACH Transfer?

An ACH transfer is an electronic, bank-to-bank transfer processed through the Automated Clearing House Network. ACH transfers are used to send or receive money from a personal or business bank account.

ACH transfers are processed two ways, which can vary in processing speed and cost: ACH debit and ACH credit. Learn more about how ACH transfers work.

What is an ACH Credit?

An ACH credit is when the funds are electronically deposited into a bank account. Think of an ACH credit as money coming to you, rather than being deducted from your account like an ACH debit.

There’s a good chance that you have seen a ‘pending ACH credit’ listed on a statement entry line on your bank’s website. One of the most common pending ACH credits that people encounter is through an employer’s direct deposit.

What is the ACH Debit Process?

Imagine 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.

Explaining an ACH Withdrawal

ACH withdrawals are are commonly associated with online transactions to pay bills and make purchases.

After providing your bank account and routing number for an ACH debit, an ACH withdrawal happens when funds are deducted from your account after providing bank account and routing information.

Consumers can associate an ACH withdrawal with online transactions to pay bills or making purchases online.

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 implemented Same Day ACH to address the speed of ACH credits and debits.

Nacha has rules that these timelines were 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. The Federal Reserve hosted town halls in 2018 about offering a Real Time Gross Settlement payment system.

More Questions on ACH?


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