What is an ACH transfer and how does it work?

In the United States, individuals and businesses use the ACH network to transfer funds domestically, primarily for payroll, bill payments, and online transactions. However, not everyone is aware that they can utilize ACH transfers for international money transfers.

Here, we'll explore ACH transfers, specifically how international ACH payments operate. We'll then compare the pros and cons of the automated clearing house network alongside alternative methods of international electronic transfer.

What does ACH stand for?

ACH stands for “automated clearing house.” It's a generic term for an electronic money transfers network that processes financial transactions, usually within one country or region. Examples of automated clearing house ACH networks include BACS in the UK, BECS in Australia, and eGIRO in Singapore. Unlike the SWIFT network, automated clearing house networks don't have a global function.

Here, we'll focus on a specific ACH operator called the US ACH network. Established in the 1970s, the US Automated Clearing House processes financial transactions for consumers, businesses, as well as local, federal, and state government branches. Its primary objective was to speed up payroll transactions.

The National Automated Clearing House Association (Nacha) governs the rules and regulations for the US ACH network. International ACH transfers have been supported for more than a decade, and their adoption is accelerating. In 2023, there were over 122 million international ACH payments, totaling $248 billion.

By the end of 2024, the ACH Network had processed approximately 33.6 billion payments, with a combined value of $86.2 trillion, representing a 7.6% increase from the previous year. Of those, 122 million were international transactions, the same number as in 2023, transferring roughly $248 billion.

International ACH activity has nearly tripled since 2014, and with the surge in Same Day ACH, which reached 1.24 billion payments valued at $3.23 trillion in 2024, it’s clear the network is evolving rapidly.

What is an Automated Clearing House (ACH) transfer?

An ACH transfer is a type of electronic transfer that moves money between banks or credit unions through the ACH network. It’s a common payment method for everything from direct deposits to recurring bill payments.

How do ACH transfers work?

To initiate an ACH transfer, the sender submits a transfer request through their bank (called the originating depository financial institution). The transfer is then bundled with others into a batch and processed by an ACH operator.

There are two primary types of ACH transfers:

• ACH credit transfers (or ACH direct deposit): When funds are pushed into an account, such as a payroll or tax refund.

• ACH debit transfers: When funds are pulled from an account, such as when paying a utility bill or subscription.

Can ACH transfers be used for international payments?

Yes – international ACH transfers, sometimes referred to as global ACH, facilitate the movement of funds from US bank accounts to overseas accounts via local automated clearing house systems. These payments can be settled in local currencies using local account details, such as a routing number or account number.

However, not all banks or financial institutions support international ACH transactions. Check with your bank before initiating a payment.

How to send an international ACH transfer?

The process may vary slightly by country, but generally includes:

• Collect the recipient’s local bank details – including bank name, account number, and routing number, or equivalent (e.g., sort code or transit number).

• Submit the transfer request to your bank – some banks allow you to include a reference note or email notification.

• The ACH operator processes the transfer – in scheduled batches.

How much do ACH transfers cost?

Domestic ACH transfers are typically free or may come with a small fee (usually under $5). They are one of the most affordable options for recurring payments within the US.

International ACH payments may cost more – typically between $5 and $50 – and can include additional currency conversion fees depending on the bank’s policies. However, they’re usually cheaper than wire transfers.

How long do international ACH transfers take?

Most international ACH transactions take 1–5 business days, depending on:

• The destination country

• The recipient’s financial institution

• Local processing times

Delays beyond seven business days should be followed up with your bank.

Are international ACH transfers secure?

ACH transfers are generally secure as they are governed by rules and regulations. Unlike wire transfers, ACH payments can be reversed in cases of fraud or error, such as overpayment or disputed charges. For instance, the bank can authorize a reversal if an employer overpays wages or a fraudulent transaction occurs. Most other transfers are irreversible.

That said, if a third-party payment service sends you funds via ACH, they may also be able to reverse the transaction, so it’s important to monitor your account activity.

When should you use ACH transfers?

ACH transfers suit a wide range of transactions, both domestically and internationally. They are ideal for:

• Recurring payments like rent, subscriptions, or utility bills

• Receiving direct deposit of payroll, social security benefits, or tax refunds

• Sending money to friends or family

• Moving funds between bank accounts at different banks

But, while convenient and cost-effective, they might not suit all situations. Wire transfers or fintech platforms can often process larger payments faster and more cost-effectively.

What is an International ACH Transaction (IAT)?

An International ACH Transaction (IAT) isn’t a payment type – it’s a classification used by financial institutions for compliance and reporting purposes. As a sender or receiver, you don’t need to take any extra steps, but it’s useful to know the terminology.

Although ACHs and IATs are easily confused, they're not interchangeable. An IAT refers to the reporting requirements for banks and providers involved in sending money internationally. It's not something you need to think about if you're a business or individual looking to send money abroad.

ACH vs. wire transfers vs. fintech platforms

While international ACH transfers offer a reliable way to send money across borders, they're not the only option available. Let's look at two other methods:

SWIFT (wire transfers)

Wire transfers, facilitated through the SWIFT network, are a well-established method for international payments. They’re fast and secure, often reaching the recipient's account within a few business days. However, wire transfers can also be expensive due to fees levied by the sending and receiving banks and any intermediary banks involved in the transaction.

Fintech platforms

In recent years, fintech platforms have become a popular solution for international money transfers. These platforms often offer competitive interbank exchange rates, lower fees, and faster processing times compared to traditional banks. Some even provide multi-currency business accounts with local bank details, letting you send and receive money as a domestic transaction.

Here’s a comparison of ACH transfer and the two alternatives mentioned:

Make fast and secure global transfers with Airwallex

Airwallex is a fintech platform that helps businesses and individuals send money across borders quickly, securely, and cost-effectively.

Airwallex offers a wide range of local and global transfer options to provide you with the fastest and most cost-effective solutions. You can send money in over 60 currencies across more than 200 countries and regions, and full payments are typically received in as little as one business day.

With an Airwallex Global Account, you can access bank-beating FX rates and avoid hidden transaction fees. You can also hold funds in multiple currencies, with local bank details for each account. This infrastructure enables you to collect payments from your international customers in their preferred currency and spend them in the same currency later, for example, to pay global suppliers and employees.

Sending international payments can be expensive and time-consuming. With modern solutions, you can now bypass traditional systems and transfer money across borders in a smarter way, protecting your bottom line.