How ACH Transfers Work

Get Started with a Free Quote!

Payment Solution

Please select your primary use case. This can always be changed later.

Thanks for signing up.
Please check your email inbox for next steps.
Oops! Something went wrong while submitting the form.

Getting paid as a small business can be challenging. It can also be expensive. ACH payments are great solution to getting paid effectively, efficiently, and rather cheaply.

If you accept checks or sell services and invoice for your work - it’s time for you to adopt ACH payments for your business.

In this blog, we’ll discuss how online ACH transfers work, why they’re a wise choice for businesses, and how to find an ACH platform to help you accept online payments securely.

What is an ACH Transfer?

ACH payments are a type of electronic funds transaction (EFT) made via the Automated Clearing House (ACH) network. 

Put simply, the ACH network is an elaborate system of interlinked computers that communicate to receive and initiate payments. 

Every time an ACH payment is initiated, there are typically 3 parties involved: one sending the request for payment (Originator), a third party processor (ACH Operator) and the counterpart receiving the request for payment (Receiver).

Today, businesses of all sizes use ACH payments to handle employee payroll and direct deposit, pay bills, and accept payouts from clients. Individuals use them to make mortgage and loan payments and more.

Because most ACH payments are made via third-party ACH platforms, which keep bank information like routing and account numbers secure, they’re considered a very safe kind of electronic funds transfer.

ACH Deposit vs. Payment

There are two different types of ACH payments that customers and companies can interact with: direct deposits and direct payments.

Here’s a breakdown of each:

●  Direct deposits are initiated by payers. Direct deposits send funds from one bank to another, where they’re deposited into a receiving financial account. Common examples include paycheck direct deposits.

Direct payments are a separate type of ACH transaction initiated by recipients. Direct payments serve as a request for funds. These ACH transactions are issued by a receiving bank account to a paying bank account. Common examples include electronic payments for recurring utility bills.

How ACH Transfers Work

In technical terms, an ACH transaction is basically a data file that contains all the essential information required to process a payment.

The file is sent to the originator's bank, then through the clearing house, and finally to the receiving bank, where the funds are transferred appropriately to the receiving account.

Here’s a quick example of how a business would set up an ACH transfer online to bill a customer:

●  Setup. To avoid handling numerous routing and account numbers, most businesses use an ACH platform, like Seamless Chex, to process ACH transactions. Seamless Chex uses Plaid to process ACH payments and keep sensitive information, including bank and routing numbers, secure. 

●  Initiation. Next, the originator (that’s you) will send all the necessary details about the transaction to the bank. Critical information includes the amount of the debit to your customer, the customer’s bank and routing information, and the date the transaction should process.

●    Completion. Next, the bank processes the information you provided and forwards the transaction to an ACH operator. The ACH operator sends the files to the customer’s bank, which completes the ACH transfer.

What Makes ACH Transfers Unique?

There are a few things that make ACH transfers stand out. The first is that they’re affordable.

When compared to credit card and wire transactions (which cost about 2% of the payment amount or $10-$35 per transaction, respectively), most ACH payments cost about $1, depending on the amount transferred.

ACH payments are also reversible, and all users are authenticated to prevent fraud, which is great news for businesses.

Seamless Chex: Your Provider for ACH Transfers Online

Looking for a smart way to process ACH transfers for your business? Seamless Chex can help. With same- or next-day funding, a 99% approval rate, and the ability to handle refunds, we can help you scale your business and expand your operations.

Discover The Payment Processing Solution That's Right For Your Business

Debit bank accounts via eCheck and ACH
Sign Up
Accept Verified ACH payments and send payouts
Sign Up
Merchant Service
Accept Debit and Credit Card payments
Sign Up

Revolutionize Payment Processing Forever

Start accepting and sending customer payments today.