How to make an ACH payment

Technology has changed business processes in every industry, and the growth of online payments is a prime example of this transformation. According to Nacha, over 31.5 billion ACH network payments were made in 2023, totaling over $80 trillion.

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Whether you’re paying vendors or employees, Automated Clearing House (ACH) payments facilitate transfers directly between bank accounts. It’s quick, cost-effective, and ideal for both businesses and individuals.

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This guide will walk you through how to make an ACH payment step by step. You’ll also learn about the benefits of using ACH over traditional methods like checks or wire transfers, and we’ll cover other B2B payment methods that might fit your business needs.

What is an ACH payment?

An ACH payment, or Automated Clearing House payment, is an electronic funds transfer (EFT) that moves money between bank accounts over the ACH network. Businesses use ACH payments for many purposes, from bill payments to paying employees via direct deposit.

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There are two types of ACH payments:

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1. An ACH debit authorizes a business or organization to “pull” funds from your account. For example, if you set up automatic bill payments for your business insurance premiums, an ACH debit is the process that goes on behind the scenes.
2. An ACH credit “pushes” money from your bank account to another account. You likely already use ACH credits if your employees use direct deposit for their paychecks.

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Nacha is the regulatory body that governs the ACH network, ensuring each transaction is secure and accurate. This simplicity, reliability, and security make ACH payments a popular choice for businesses and consumers alike.

How to make ACH payments

Now that you understand ACH payments, let’s cover how to make them. The process is straightforward, whether you’re sending money (ACH credit) or authorizing another business to withdraw funds from your accounts (ACH debit).

How to send an ACH payment

Here’s the process to send money to another account with an ACH credit:

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1. Gather the other party’s account information: To initiate an ACH credit, you’ll need the recipient’s bank details, including their routing and account numbers. Many businesses collect this information using a direct deposit authorization form. Make sure the information is accurate since mistakes can delay or misdirect the payment.
2. Log in to your accounting software or online banking platform: You may be able to make ACH payments through your accounting software or your financial institution’s mobile banking platform. Look for a section called “Transfers” or “Payments” and select “ACH Transfer” if available.
3. Enter payment details: Enter the recipient’s bank account and routing numbers, the amount you want to transfer, and any other relevant information, like a memo or invoice number
4. Review and confirm: Before submitting the payment, double-check all the details to ensure the payment goes to the right place. Once confirmed, the ACH network will process the transaction within 1 to 3 business days, depending on your bank’s policies.

How to authorize an ACH withdrawal

Here’s the process for authorizing another company, such as your utility provider, distributor, or software vendor, to withdraw funds from your account to pay bills and invoices:

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1. Provide your account information: When you agree to set up ACH debits, you need to provide the other company with your banking information, including your routing and account numbers. You can do this over a secure online portal or via paper authorization form.
2. Authorize the transaction: You typically need to sign a consent form—either digitally or on paper—authorizing the company to deduct a specific amount from your account at regular intervals. For example, you may authorize your utility company to withdraw electronic payments monthly.
3. Review payment details: Make sure you understand the payment terms, including the date the company will withdraw the funds from your account, the amount of the withdrawal, and any payment processing fees involved
4. Monitor your account: Once you set up the ACH debit, check your bank account to ensure the transaction happens as planned

What are the benefits of using ACH?

ACH payments offer several benefits that make them popular for businesses and consumers. Here’s a look at a few of the advantages they offer.

Cost-effective

One of the biggest advantages of ACH payments is their affordability compared to other payment methods.

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For example, according to USA Today, the median fee to receive a domestic wire transfer is $5, while the median cost to send one is $25. International wire transfers are even more expensive, averaging $25 to receive and $50 to send.

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According to Nacha, paper checks are more affordable, with a median cost between $2.01 and $4 per check. However, paper checks can get lost in the mail and are susceptible to fraud.

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In contrast, ACH payments have a median cost between 26 cents and 50 cents. With lower transaction fees, businesses can save money on every transaction, which is especially beneficial for companies that send or receive a high volume of payments.

Fast and efficient

Although ACH payments aren’t instantaneous like some wire transfers, they offer a quick turnaround—generally within a few business days. This makes them much faster than traditional check payments.

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Ramp Bill Pay makes ACH payments even faster with same-day delivery on eligible bills. And because Ramp automates your entire accounts payable workflow, every bill can be recorded, approved, and paid without data entry or repetitive tasks.

User-friendly

Making an ACH payment is as easy as logging in to your online banking platform or financial software like Ramp. There’s no need for paper checks or trips to the bank since you can handle the entire process from your computer or smartphone. Plus, setting up automatic ACH payments helps you pay vendors on time without ongoing manual effort.

Secure

Security should be a priority when dealing with financial transactions, and ACH payments are highly secure. Nacha requires all participants to comply with strict security guidelines to ensure data protection and transaction accuracy.

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While cybercriminals have found ways to steal funds through the ACH network, you can help keep your ACH transactions secure by:

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• Using a platform like Ramp, with advanced encryption and built-in fraud detection
• Using strong passwords and changing them regularly
• Restricting access to any computer, app, or software used for ACH transactions
• Keeping your firewalls and antivirus software up to date
• Implementing multifactor authentication (MFA) to ensure the person initiating an ACH transaction is who they claim to be

Other payment options 

Depending on the volume and nature of your business's transactions, you might want to use other methods to send and authorize payments. Here are a few alternatives to consider:

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• Wire transfers: Wire transfers are good for sending large amounts of money as quickly as possible. Wire transfers are instantaneous, but they can cost anywhere from $5 to $25, so they’re best for urgent but infrequent transactions and international transfers.
• Credit and debit card payments: Most businesses accept credit and debit card payments, and they’re a fast and easy way to send and receive payments. But credit and debit card transaction fees can add up quickly. According to the Nilson Report, total credit card and debit card “swipe fees” topped $172 billion in 2023, and many merchants pass these fees onto customers in the form of higher prices or fees.
• Paper checks: Checks are still a reliable option for many businesses. While slower and more labor-intensive, they offer a paper trail and are familiar to many small business owners and customers. The downside of paper checks is your financial institution may take a few days to process them, and may place a hold on the funds. Plus, there’s always the risk of bounced checks or delays in delivery.
• Online payment platforms: Digital payment processors like PayPal, Stripe, and Square provide a user-friendly option for ecommerce businesses. These platforms allow companies and customers to send and receive payments electronically using a credit card, bank account, or digital wallet. They may also offer features like invoicing and recurring payments. However, like credit and debit card payments, these platforms charge processing fees that can eat into your margins over time.

ACH payment FAQs

If you still have questions about how ACH payments work, we’ve answered a few frequently asked questions below.

How much do ACH payments cost?

ACH payments typically cost between $0.11 and $0.50 per transaction, depending on your bank or payment processor. Some banks offer free ACH transfers, making them an especially affordable business option.

How long do ACH payments take?

ACH payments generally take a few hours to a few business days to process. Some banks and platforms offer same-day ACH options, though these may come with an additional fee.

How do I receive an ACH payment?

To receive an ACH payment, you must provide your bank account and routing number to the payer. Once set up, funds will be in your account within a few business days.

Is ACH different from a wire transfer?

Yes, ACH payments are different from wire transfers. ACH payments are processed through a clearing house, while wire transfers are transacted directly between two financial institutions. ACH payments are more cost-effective than wires, but wire transfers are faster, especially for international transactions.

Can I send an international ACH payment?

Yes, you can use ACH to make international payments. Nacha worked with the Office of Foreign Assets Control (OFAC) to develop a formal system for this.

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The process for international ACH transfers, also known as a global ACH, may differ from a domestic ACH transfer. For example, international banks may use a different code, like a sort code or transit number, instead of a routing number.

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Global ACH transfers also tend to cost more than domestic ACH transfers but are usually still cheaper than wire transfers.

Is an ACH payment the same as an ACH transfer?

Yes, the terms “ACH payment” and “ACH transfer” refer to the same process of transferring funds electronically between banks using the ACH network.

Automate your ACH payments with Ramp

No matter which payment method you choose, Ramp’s modern finance platform can help improve your payment workflows. Our AP automation software lets you make payments via check, card, same-day ACH, or international wire transfer from a single dashboard.

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Ramp Bill Pay uses AI to automate your entire accounts payable workflow, from processing invoices to scheduling payments. With all your payment data in a unified dashboard, you can quickly find any invoice, analyze monthly spend, and find opportunities to optimize cash flow.

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Ramp saves your company time and money. Watch our demo video to see why Ramp customers save an average of 5% a year.