How ACH Transfers Work

Automated Clearing House (ACH) transfers are the electronic transfer of money between banks. Essentially, your money is pulled from an account or sent to be “pushed” another online.

From the online bill payments you make to the direct deposits you receive, you’re probably familiar with them already. ACH transfers are one of the main ways to send or receive money online.

How it Works

The Automated Clearing House processes ACH transfers from bank-to-bank. For sending money, many transfer providers, including your bank, offer ACH options, including Zelle and various other third-party apps like our very own Payrazr solution.

Types of ACH Transfers

ACH Debit Transactions 

These transactions involve PULLING money from an account. A simple example would be when you set up recurring payments; the company can then “pull” the amount you owe on your account every month.

ACH Credit Transactions

Conversely, credit transactions allow you to PUSH money to various accounts at different banks. These can either be accounts you, your friends, or your family own.


It’s probably worth noting that many ACH debit transfers, including payroll direct deposits and most bill payments, are free. However, if you need that money fast and want to expedite the process, there are usually extra fees.

Also, transfers between linked accounts at different banks are free, or they charge a flat rate (around 3 dollars).

With ACH credit transfers, you’ll still find the same transfer charge of about 3 dollars between accounts at different banks. You’ll also see offers for “external funds” to be transferred for free.

ACH transfer vs. Wire transfers 

You might be inclined to ask, “Then what’s the difference between wire transfers and ACH transfers?”

We’ve stated that the cost of ACH tends to be on the cheap (around 3 dollars). However, sending a bank wire transfer, in the US, costs between 20 to 30 dollars; not only that, but there’s usually a fee to receive a wire transfer as well.

The one benefit of wire transfers is that they process transactions in real-time, being complete in a matter of hours, if not minutes. Typically, wire transfers are preferred for large-sum transactions because of their speed.


ACH transfers have become a staple in the US. Some of the most common examples being when

  • A customer paying a service provider
  • Employers depositing money into their employees’ checking accounts
  • Consumer moving funds from one bank account to another
  • Businesses paying suppliers for products

Because of their cost-effective and secure nature, ACH transfer systems are the ideal tool for companies to transfer money from one account to another, especially in the modern world of subscription-based businesses and monthly recurring bills.

ACH allows you to give your customers a more convenient way to pay.