How Long Does An ACH Payment Take? A Guide To Payment Transfers And Processing Timing

November 19, 2020

ACH payments are a smart payment processing option for businesses who need secure, recurring funds regularly, but how long do ACH payments take? The ACH network works differently than other payment processes, and it has its own timing as well. Still, as more businesses adopt this type of transaction thanks to faster payment processing times, an ACH Network is becoming a quick and affordable way to secure sales.

How long does it take to receive an ACH payment? In this article, we'll take a look at ACH payments and discuss how the timing measures up to other forms of payment. But first, we'll start with the basics.

What is an ACH payment?

An Automated Clearing House (ACH) is a network that transfers electronic payments between banks. It is different from a credit card transaction in that an ACH Payment requires approval from the customer to withdraw directly from his or her bank account. In contrast, credit card companies pay the receiver of the funds through its own bank and receive payment from the customer later.

Some common examples of ACH payments are direct deposits and Paypal, and companies such as us here at BNG Payments provide the service. ACH payments are commonly used for recurring payments such as monthly subscriptions or memberships but can be used for single purchases. It also can even be used to deposit checks or e-checks.

A key benefit of an ACH payment over credit cards and other payment methods is the cost per transaction. The ACH Network charges between one and three percent cheaper than credit cards and debit cards, depending on the vendor, and this can be a significant advantage for businesses.

What is the timing of payments through the ACH Network?

The typical time range can depend. It can be as quick as the same day or take 3 to 5 days. Timing is up to the banking institutions. Today the ACH network pushes for faster payments, so many banks offer credit for the same day or the following day.

Even with quick approvals, it is usually best to wait a few days before spending the received funds. The transfer of money isn't actual money in physical form, at least not yet. It is more like promises of money that are yet to be realized, backed by banks and the FDIC. A completed transaction says the receiving bank has approved the funds, but it can still take a few days to be 100% true, which means you could run into a problem if you spend it too early. It is best to wait for that promise to be realized.

Why can it take as long as 3-5 days?

This general timeline accounts for slower banks and the regular banking hours of each institution. If transactions are done when the bank is closed for the day or if payments are made during a holiday (which banks typically take off), they need to catch up. Since an ACH payment involves two banks, with one bank moving funds to the other, this creates a general timeline basis of 4 to 5 days to cover each bank's timing.

In the past, ACH networks used to submit payment requests once or twice a day to keep a 3-5 day transition time as short as possible. Still, now the ACH network is moving to three submissions a day, and more banks are complying with faster approvals, making same-day transactions more common.

How fast is an ACH payment compared to other forms of payment?

Today's world of same-day or next-day approvals makes receiving actual payments faster than credit cards and check payments and more convenient than cash deposits.

Credit Cards: Companies like VISA and Mastercard take 2-3 days, putting them on par with ACH payments when considering when funds are available, though the ACH payments are significantly less expensive. American Express takes up to 3 to 5 days.

Debit Cards: The systems used to process debit cards are similar, and in many cases, the same, to credit cards, which means timing is also similar. On average, it takes 1 to 3 days.

Standard Checks: They typically take about two days to clear and about five days total to receive the funds, and the timing can take up to 9 business days for checks over $5,000 or $10,000.

Cashier's Checks: These checks usually clear the next business day because they were already verified and provided by the sending bank. It's important to note that the cost for depositing a check is about $9 for the sender, much higher than the ACH payments.

Wire transfers: These transfers typically take 24 hours, but it can range as short as a few hours for domestic transfers or up to two days in some cases. International transfers usually take 1-5 days. It's important to note that wire transfers, though quick, are quite pricey. A customer will have to pay between $25 to $50 per transaction, and it costs an additional $15 to receive the funds.

Money Orders: Money orders are either immediate or the next business day but have a limit of around $1,000 and are less secure than those offering cashier's checks or ACH payments.

Cash: This form of payment has no fees and is as fast as it gets, though it is prone to fraud and miscounting, and it requires precise accounting by the business.

Benefits of an ACH payment over other payment types

ACH payments don't require payment receivers to physically deposit checks or cash, and they can actually aid with check deposit transactions. The ACH Network also allows for regular, on-time payments from customers, which is good for the receiver and the customer who would otherwise receive late fees. The cost per transaction is lower than most payment types, and today's ACH fraud protection allows it to safeguard the funds better than most other payment options. Like a wire transfer or credit card payment, ACH payments connect directly from one bank to another without interference by scrupulous characters.

How to get ACH payment processing

ACH payments are offered through merchant providers like us here at BNG Payments. We offer ACH, credit card, online, and check processing for any business type - including nonprofit companies. You get the option of EMV and PCI-compliant processing for powerful fraud protection and a wide range of point-of-sale software, including mobile and table-side options. And we can help make your transition into ACH easy by adopting our software into your current systems and adding more systems as your business grows.

Let us know your needs, and we'll show you how ACH and other forms of payment can benefit your bottom line.

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