ACH payments: How they work, costs & how to accept them (2026)

Key Takeaways:

• An ACH payment is an electronic bank-to-bank transfer processed through the Automated Clearing House (ACH) network. It comes in two forms: ACH debit (pulling funds from an account) and ACH credit (pushing funds to an account).

• ACH payments are cheaper than wire transfers and credit card processing fees, making them a strong choice for payroll, recurring vendor payments, and bill payments.

• With Airwallex, businesses outside the US can send and receive USD via ACH through a Global Account, no US entity required.

An ACH payment is one of the most common ways to move money electronically in the United States, and it’s used for everything from payroll and supplier invoices to recurring bill payments.

For businesses, ACH payments offer a cost-effective alternative to wire transfers and credit card processing. They are cheaper, easy to automate, and widely accepted across US banks and financial institutions.

This guide explains what ACH payments are, the two main types, how the payment process works step by step, and how to use them for your Singapore business.

What is an ACH payment?

An ACH payment is an electronic transfer of funds between two bank accounts, processed through the Automated Clearing House (ACH) network. The network is governed by Nacha (the National Automated Clearing House Association), which sets the rules and standards for all transactions on the network.

You will often see the terms "ACH payment" and "ACH transfer" used interchangeably. There is a subtle difference:

• ACH transfer is the broader term for the process of moving funds through the network

• ACH payment refers to the individual transaction, such as a specific payroll deposit or a recurring invoice payment.

ACH payments are a faster, cheaper alternative to paper cheques and domestic wire transfers. Unlike cheques, there is no postal delay. Unlike wire transfers, the fees are significantly lower.

They can be initiated by either the payer or the payee, depending on the type of transaction. This makes them flexible for a wide range of business payment needs.

Types of ACH payments

There are two types of ACH payments: debit and credit. The difference comes down to who initiates the transaction and which direction the money moves.

Type 1: ACH debit

An ACH debit payment pulls money from the payer's bank account. The payee (usually a business) initiates the transaction after receiving authorisation from the account holder.

This method is best suited for subscription payments, recurring invoices, and automated bill collections. Because the business controls the timing, it reduces the risk of late payments and makes cash flow more predictable.

Examples include a gym collecting monthly membership fees, a SaaS company billing clients on a set date, or a utility provider withdrawing payment on a due date.

Type 2: ACH credit

An ACH credit payment pushes money from the payer's account to the recipient's account. The payer initiates the transaction, giving them full control over the timing.

This method is commonly used for payroll, vendor payments, and tax refunds. A business running payroll, for example, initiates an ACH credit to send wages directly into each employee's account on payday.

Both types are processed through the same ACH network infrastructure and follow the same settlement process. The key difference is simply who starts the transfer, and whether funds are being pulled or pushed.

How ACH payments work

ACH payments do not move in real time. They are processed in batches: groups of transactions collected together and settled at set times during the banking day. The ACH network processes payments 23¼ hours every banking day and settles them four times a day.¹

The ACH payment process, step by step

Every ACH payment involves two key participants on the banking side:

• ODFI (Originating Depository Financial Institution): The bank or financial institution that sends the payment instruction into the ACH network on behalf of the originator.

• RDFI (Receiving Depository Financial Institution): The bank that receives the payment instruction and credits or debits the recipient's account.

Here is how a typical ACH payment flows from start to finish:

• Authorisation: The payer or payee (depending on whether it is a debit or credit) authorises the transaction. For ACH debits, the account holder must give explicit permission before any funds can be pulled.

• Initiation: The originator (the business or individual sending the payment) submits the payment instruction to their bank, the ODFI.

• Batching: The ODFI bundles the transaction with other ACH payments into a batch file and submits it to an ACH operator. There are two ACH operators in the US: the Federal Reserve and The Clearing House Payments Company's Electronic Payments Network (EPN).

• Routing: The ACH operator sorts the batch and routes each transaction to the correct RDFI.

• Settlement: The RDFI receives the instruction and credits or debits the recipient's account. Nacha estimates that 80% of all ACH payments settle in one banking day or less.²

Same-Day ACH

Same-Day ACH is a faster version of the standard ACH process, launched in 2016. Instead of waiting for next-day settlement, payments can clear on the same banking day they are submitted, provided they are sent before the daily cut-off.

There are three Same-Day ACH processing windows each banking day. The final submission deadline is 4:45 p.m. ET, with settlement at 6:00 p.m. ET. The per-transaction limit for Same-Day ACH is US$1 million.¹

Same-Day ACH has grown rapidly. In 2025, it processed 1.4 billion payments valued at US$3.9 trillion¹, which is a 16.7% increase in volume from 2024. This growth reflects businesses increasingly choosing faster settlement for time-sensitive payments such as same-day payroll or urgent vendor invoices.

Note that International ACH Transactions (IATs) are not eligible for Same-Day ACH processing.¹

International ACH Transactions (IATs)

The ACH network is primarily designed for domestic US transfers. However, International ACH Transactions (IATs) allow payments to be sent from a US-based account to a foreign bank account, and vice versa.

IATs follow the same batch-processing structure as domestic ACH, but settlement takes longer (typically one to five business days) because the payment must clear through the receiving country's local banking system.

IATs are also generally more expensive than domestic ACH transfers, though they remain cheaper than most international wire transfers.

For businesses in Singapore, platforms like Airwallex make it possible to send and receive USD via ACH without a US bank account or a US-registered entity, by providing local USD account details through a Global Account. Learn more about Airwallex Global Accounts or sign up now.

ACH payment vs. other payment methods

ACH payments are not the only way to move money electronically. How they compare to wire transfers and card payments determines when you should use them, and when you should go with another method.

ACH vs. wire transfer

Wire transfers move money in real time, bank to bank. They are faster and better suited for large, time-sensitive payments, but that speed comes at a cost.

In contrast, ACH payments settle more slowly but are far cheaper, and they support both push and pull transactions.

Here’s a quick overview:

The information in this table has been reviewed to be accurate as of 2 July 2026.

For a deeper look at the ACH vs. wire comparison, see our ACH vs. wire transfer guide.

ACH vs. credit card payments

Credit card processing fees typically include a percentage of the transaction value plus a fixed fee per transaction. For high-value invoices or recurring payments, these fees add up quickly.

ACH payments avoid card network fees entirely. The payer transfers funds directly from their bank account, which means no interchange fees, no card network markups, and no card chargeback process.

For businesses collecting large invoices or running recurring billing, ACH is significantly cheaper than accepting card payments.

The trade-off is that card payments are instant and widely familiar to consumers. ACH requires the payer to share bank account details and give authorisation, which adds a small amount of friction upfront. For B2B payments and recurring transactions, however, that one-time setup is usually worth the cost savings.

Benefits of ACH payments

ACH payments offer a practical combination of low cost, automation, and reliability that makes them well-suited for routine business payments. Here are the main reasons businesses use them.

Cost efficiency

ACH payments cost significantly less than wire transfers and card processing fees. For businesses that make frequent or recurring payments (such as weekly payroll or monthly vendor invoices) the savings at volume are substantial.

This cost advantage is one reason business-to-business ACH payments grew 9.9% in 2025, as more companies moved away from paper cheques and expensive wire transfers.¹

Automation and convenience

ACH payments can be scheduled in advance and set to recur automatically. Once a payment schedule is in place, there is no need to manually initiate each transaction.

This reduces administrative work, lowers the risk of late payments, and makes it easier to manage cash flow predictably.

Reversibility

Unlike wire transfers, ACH payments can be corrected after the fact.

ACH credit entries can be reversed within five banking days of settlement if an error is made (for example, a duplicate payment or an incorrect amount.³) This gives businesses a safety net that wire transfers do not offer.

Accessibility for non-US businesses

ACH payments have traditionally required a US bank account, which often meant establishing a registered US entity or a US banking presence. That barrier has now been removed.

Fintech platforms like Airwallex now allow businesses outside the US to access the ACH network through local USD accounts, send and receive dollar payments like a local, and avoid the cost and complexity of setting up a US entity. Learn more about Airwallex Global Accounts or sign up now.

Risks and limitations of ACH payments

ACH payments are reliable, but they are not without limitations. Understanding the risks helps you set up the right controls before you start using them at scale.

Settlement is not instant

ACH payments are not real-time. Standard processing takes one to three business days, and even Same-Day ACH has cut-off times. If a payment misses the final processing window, it will not settle until the next banking day. For time-critical transactions, a wire transfer is still the safer option.

Return codes and rejected payments

When an ACH payment cannot be completed, the RDFI sends back a return code explaining why. Common return codes include:

• R01 – Insufficient funds: The payer's account does not have enough money to cover the transaction

• R02 – Account closed: The account number provided is no longer active

• R03 – No account: The account number does not match any account at the receiving bank

• R10 – Unauthorised debit: The account holder claims they did not authorise the transaction

Standard ACH debit returns must be submitted within two banking days of settlement.³ Returned payments can disrupt cash flow and may incur return fees from your payment processor. Building a process to verify account details before initiating payments reduces the risk of returns significantly.

Authorisation requirements

For ACH debits specifically, you must obtain explicit authorisation from the account holder before pulling funds. This authorisation can be written, electronic, or recorded verbally, but it must be obtained and retained.

Pulling funds without proper authorisation exposes you to R10 return claims and potential liability under Nacha rules.³

Limited international reach

The ACH network is primarily a US domestic system. While International ACH Transactions (IATs) exist, they are slower and not available for all countries. Businesses that need to make frequent cross-border payments will need a separate solution for non-US transfers.

How to accept ACH payments

Accepting ACH payments involves a few setup steps, but once the process is in place it runs with minimal ongoing effort. Here’s how to get started:

Step 1: Choose a payment processor or platform

You need a payment processor or banking platform that supports ACH transactions. Options range from traditional US banks to fintech platforms that give you ACH access without a US entity.

Consider factors such as per-transaction fees, batch processing limits, and whether the platform supports both ACH debit and ACH credit.

Step 2: Set up your account details

Once you have chosen a platform, you will receive a US routing number and account number. These are the details your customers or partners will use to send ACH payments to you.

If you are using a fintech platform like Airwallex, you can receive these details through a Global Account, even if your business is based outside the US.

Step 3: Obtain authorisation from your payers

Before pulling any funds via ACH debit, you must obtain explicit authorisation from the account holder.³ This can be done through:

• A signed paper authorisation form

• An online form with a digital signature or checkbox consent

• A recorded verbal agreement (less common for business payments)

Keep a record of every authorisation. If a customer disputes a transaction with an R10 return code, you will need to produce proof of authorisation.

Step 4: Collect payer bank account details

You will need the payer's US bank routing number and account number. For recurring payments, collect these details once during onboarding and store them securely. Many payment platforms offer hosted payment forms that handle collection and encryption on your behalf.

Step 5: Initiate the payment

Submit the payment instruction to your processor before the relevant ACH cut-off time. For standard ACH, most processors have a daily cut-off in the early afternoon ET. For Same-Day ACH, the final cut-off is 4:45 p.m. ET.¹

Missing the cut-off means the payment will not process until the next banking day.

Step 6: Monitor for returns

After the payment is submitted, monitor your account for return codes. Most returns come back within two banking days for ACH debits.³

Set up notifications with your processor so you are alerted immediately if a payment is returned, and have a follow-up process ready for common return reasons such as insufficient funds or closed accounts.

Step 7: Reconcile and record

Once payments settle, reconcile them against your invoices or payment records. Most payment platforms provide transaction reports that can be exported directly into accounting software, making this step straightforward.

Why Singapore businesses choose Airwallex for ACH payments

If you need to use ACH payments but don't want to go to the trouble of setting up a US entity, the simplest way is to use Airwallex.

With an Airwallex Global Account, you get a real US routing number and account number, so US customers and partners can pay you via ACH as if you were a local US business. Here’s how it works:

Send ACH payments and international transfers from one place

Airwallex lets you send funds via ACH to US-based suppliers and partners, and make international transfers to 200+ countries, all from the same platform. You do not need separate accounts or providers for domestic USD payments and cross-border transfers.

Hold and convert USD without unnecessary FX costs

Once you receive USD via ACH, you can hold it in your Airwallex multi-currency wallet and convert it when the rate works for you. There is no automatic conversion to SGD, no forced same-day exchange, and no hidden spread built into the rate.

Frequently asked questions (FAQs)

Is an ACH payment the same as a direct deposit?

Direct deposit is a type of ACH payment, but the two terms are not interchangeable. ACH is the network; direct deposit is one specific use case — a credit pushed from an employer or government agency into an individual's bank account. Other ACH payments include bill payments, vendor payments, and recurring subscriptions.

How long does an ACH payment take to process?

Standard ACH payments take one to three business days to settle. However, Nacha estimates that around 80% of ACH payments settle within one business day.² Same-Day ACH is available for faster settlement, provided the payment is submitted before the daily cut-off of 4:45 p.m. ET.¹

Is an ACH payment the same as a wire transfer?

No. Both are electronic bank-to-bank transfers, but they work differently. ACH payments are processed in batches and take one to three business days. Wire transfers settle in real time — usually the same business day for domestic transfers. Wire transfers are also significantly more expensive. For a full breakdown, see our ACH vs. wire transfer guide.

Can I stop or reverse an ACH payment?

In some cases, yes. Scheduled ACH payments can be cancelled before they are submitted for processing. Once a payment is in progress, ACH credit entries can be reversed within five banking days of settlement to correct errors such as duplicate payments or incorrect amounts.³ ACH debit returns (for reasons such as insufficient funds) must be submitted within two banking days.³ Wire transfers, by contrast, generally cannot be reversed once cleared.

Can a business outside the US use ACH payments?

Yes. Businesses outside the US can send and receive ACH payments by using a platform that provides local US account details. Airwallex, for example, allows Singapore businesses to receive USD via ACH through a Global Account without needing a US entity or a US bank account.

What information do I need to make an ACH payment?

To initiate an ACH payment, you need the recipient's US bank routing number, bank account number, and account type (checking or savings). For ACH debits specifically, you also need a signed or electronic authorisation from the account holder before you can pull funds from their account.³

Sources:

1. nacha.org/content/ach-payments-fact-sheet

2. nacha.org/content/how-ach-payments-work

3. nacha.org/rules/reversals-and-enforcement

4. jpmorgan.com/insights/treasury/payables-disbursements/wire-transfers-how-they-work-security-and-fees

5. chase.com/content/dam/chase-ux/documents/personal/checking/biz-how-your-transaction-will-work.pdf

This publication does not constitute legal, tax, or professional advice from Airwallex, nor does it substitute seeking such advice, and makes no express or implied representations / warranties / guarantees regarding content accuracy, completeness, or currency. If you would like to request an update, feel free to contact us at [[email protected]]. Airwallex (Singapore) Pte. Ltd. (201626561Z) is licensed as a Major Payment Institution and regulated by the Monetary Authority of Singapore.