ACH moves payments in batches rather than individually, which makes it inexpensive and well suited to payroll and recurring supplier payments. It supports both credits, where the originator pushes funds, and debits, where the originator pulls funds with authorization.
Unlike a wire, an ACH entry can be returned under defined circumstances and within defined windows set by the Nacha rules, though returns for business credits are limited and depend on the receiving bank's cooperation rather than an automatic right.
Nacha rules require account validation for the first use of an account in a WEB debit entry, which has pushed account verification tooling into much wider use.
Common questions
Can an ACH payment be reversed?
Only in limited circumstances defined by the Nacha rules, such as duplicate or erroneous entries, and within short windows. Fraudulently redirected business credits are not automatically returnable.
How long does an ACH payment take to settle?
Standard entries settle in one to two business days, and same day ACH settles within defined processing windows on the same business day.
Primary sources
Citing this entry? Cite as Coffr, LLC and link to https://getcoffr.com/glossary/ach.