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What is an example of an ACH payment?

Direct deposits (an ACH credit often used for payroll) and automatic recurring payments (ACH debits for services like utilities) are common examples of ACH payments.

ACH payments provide a convenient, inexpensive, and digital way for one party to send funds to or collect funds from another party.

Image for an example ACH payment

Credits and debits are two kinds of ACH transactions. The difference between the two is determined by the direction money moves. For an ACH credit, funds are deposited (or pushed) funds into a bank account. For an ACH debit, money is withdrawn (or pulled) from an account.

Banks sending and receiving ACH payments are either Originating Depository Financial Institutions (ODFIs)—they originate the payment—or Receiving Depository Financial Institutions (RDFIs)—they receive the payment.

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ACH (Automated Clearing House) is a payment processing network that’s used to send money electronically between banks in the United States. It allows for automated, electronic debiting and crediting of both checking and savings accounts.

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Whereas an ACH payment can be either a credit (adding money) or debit (withdrawing money), direct deposit is always an ACH credit payment.

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No, ACH and Zelle are not technically the same thing, although Zelle utilizes the ACH network. Basically, all Zelle payments are (instant) ACH payments but not all ACH payments are Zelle payments.

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Most US banks and other FIs (financial institutions) including credit unions allow ACH transfers. To send and receive ACH payments, an FI must be part of the ACH (Automated Clearing House) network, which is governed by Nacha.

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The biggest reason to use ACH instead of a wire transfer is cost. ACH payments are usually much less expensive than wires.

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The maximum ACH transfer limit varies depending on your financial institution and account type. Potential limits range from $3,500 per day (Bank of America) to $25,000 per day (JPMorgan Chase) for personal checking and savings accounts.

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