How long does an ACH transfer take?

What Is ACH Processing?

If you’re looking into ways to transfer money online, ACH transfers likely came up as an affordable and reliable option. But you’ve probably also realized it may not be the fastest payment method.

With same-day or even instant payment options, you may be wondering why ACH payments, which take a few days to process, are gaining so much traction.

In this article, we’ll discuss ACH payment processing time and ACH cutoff time. We’ll also quickly walk you through what an ACH payment is and what the payment process looks like.

Let’s dive right in!

ACH processing is the method of transferring money between banks using the Automated Clearing House network. It groups transactions into batches and processes them at scheduled intervals, typically settling within 1–3 business days. ACH processing supports direct deposits, bill payments, and recurring transfers.

ACH payment processing time: key takeaways

• The value of ACH is derived from its low price and reliability but speed isn’t its strong suit.
• A standard domestic ACH transfer takes one to three business days to process.
• Fast ACH options, delivered on the same day, are available for a higher fee. 
• International ACH payments can take up to five business days.

What is ACH?

An ACH payment is a type of electronic funds transfer (EFT), also known as ACH EFT. In other words, it’s a way to digitally send money from one bank account to another using a network of banks and financial institutions referred to as automatic clearing houses (ACH).

The network is governed by a nonprofit organization called Nacha and overseen by the Federal Reserve, which functions as a central clearing facility (or ACH operator). Member institutions use the ACH network to communicate with each other, validate information, and, if all goes well, transfer money between bank accounts.

There are two main kinds of ACH: ACH credit and ACH debit. ACH credit is a standard bank transfer initiated by the payorPayorAll transactions have at least two players–the payor is the one who’s paying, and the payee is the one who receives the payment.. ACH debit is initiated by the payeePayeeAll transactions have at least two players–the payor is the one who’s paying, and the payee is the one who receives the payment. who sends a request to withdraw funds from the payor’s account, assuming they gave prior permission. This is useful when you have recurring payments to the same recipient with varying sums, for example, utility bills. 

Thanks to the low cost and safety measures enforced by Nacha and the Fed, businesses are increasingly choosing ACH for business-to-business (B2B) transactions. In fact, over the past ten years, the volume of ACH payments between businesses more than doubled, from $26.6 trillion in 2014 to $54.2 trillion in 2023.

How does ACH work?

Every ACH transfer starts when a payment is initiated by either the payor (in the case of an ACH credit) or by the recipient (if it’s an ACH debit, sometimes referred to as an ACH withdrawal).

The money and an ACH data file then move through the ACH network.

Once the ACH operator validates the information, the money is sent to the recipient’s bank and deposited in their account.

Benefits of accepting ACH payments

Instead of waiting for a check or using plastic to get paid, ACH offers a number of benefits to consider:

• Improved cash flow: With ACH, payments are sent directly to your business bank account. There’s no need to wait for a check to clear. Technically, ACH payments could take 3-5 days for verification purposes, but typically, a transaction is settled in 1-3 days and some even settle in a day or overnight.
• Convenience: ACH payments free up your time, giving you more hours to devote to running your business. You don’t need to waste time—whether in person or via a mobile phone—to deposit a check, ACH payments are automated. If you have regular customers, you can schedule payments, so you set it and forget it.
• Cost savings: ACH payments are usually free, although some banks may charge a modest fee for transferring funds to different banks. Whichever the case, it’s less costly than accepting payments through credit cards, which have high transaction costs. Similarly, some business bank accounts may charge each month for check deposits.
• Security: ACH payments offer considerable protection against fraud. In comparison, checks sent to you by mail can be intercepted by thieves. Unlike credit card payments which can easily be reversed (“chargebacks”) when customers raise disputes, you have greater comfort in keeping your money with ACH payments. With ACH payments it’s hard for a customer to dispute a payment.

How long does ACH take?

Speed, or lack thereof, is one of the main disadvantages of ACH payments compared to wire transfers, which arrive on the same business day. So, why not just choose wires every time? It all comes down to cost. Wires are quick but expensive while ACH is slow and steady but much more affordable.

How long does it take for ACH to clear, you ask? Well, a standard ACH transfer within the U.S. takes between one and three business days. Both ACH credit and ACH debit work within this time frame.

An international ACH transfer can take up to five business days to complete. 

ACH cutoff times vary depending on your bank or payment service so be sure to check the terms in advance if you’re on a schedule.

Are there faster ACH options?

Until recently, the only way to send urgent payments was with a wire, which is typically much more expensive, costing up to $30 in fees for every transaction. This makes wires a far less viable option for everyday payments, especially for small businesses that need to make every penny count to preserve cash flow. And depending on your chosen method, how long Melio payments take can vary—from standard to same-day ACH.

Over the past few years, fast ACH has become a common alternative offering same-day payments at a more affordable price. It’s especially attractive for lower-value transactions as the fee for fast ACH is often calculated as a percentage of the total sum, not a flat fee.

The average cost of ACH transfers

The fees for online ACH payments vary greatly depending on your bank or payment platform. 

Here’s what the various kinds of ACH typically cost: 

• Standard ACH: up to $1.5
• Fast ACH: 1%-2% of the transaction
• International ACH: 1.5%-2% of transaction

Melio, considered one of the best ACH payment processing tools for small businesses, can help you manage these costs more efficiently.

When to choose ACH payments

Despite their slower processing, ACH benefits like competitive pricing, automation, and reliability make them ideal for: 

• Less urgent payments
• Paying vendors and suppliers
• Rent and utilities
• Other recurring payments
• Lower-value international or fast payments
  

When it comes to security, you might be wondering, are ACH payments safe? Absolutely—ACH payments are protected by strict regulations and multiple layers of verification. In fact, many businesses even consider ACH safer than wire transfers.

Send ACH payments to your vendors and suppliers

Now that you know how long ACH transfers take, you can make the right choice for your business payments every time. For a smart and cost-effective B2B payment solution, use Melio to send ACH bank transfers to all your vendors and suppliers.