These days, there are a number of different ways for companies to send and accept payments. An ACH transfer is one of the most common methods used to send or receive money online. One of the most common questions banks get regarding ACH transfers is, “How long does an ACH transfer take?”

Read on to learn more about the entire ACH transfer process and gain some insight into how long it will take to complete your next ACH transfer.

How long do ACH deposits take?

As the name suggests, an ACH transfer is the transfer of funds between banks over the Automated Clearing House network. These transfers include everything from business-to-business payments to bill payments and direct deposits.

The two types of ACH transfers are credit transfers and debit transfers. Credit transfers let you send money to a different bank account, while debit transfers involve receiving money from an account. For example, a credit transfer could be when you have to pay a vendor while a debit transfer could be receiving money from a client. 

The two types of ACH transfers vary in speed. Here’s a little bit more information on how long an ACH transfer typically takes:

  • ACH credit transfers: A credit transfer can be processed on the same business day, but it typically takes at least one to three business days to go through.
  • ACH debit transfers: On the other hand, a debit transfer must be processed by the next business day, per regulations set by the National Automated Clearing House Association.

An overview of the ACH process

To understand how long an ACH transfer takes, it’s important to consider the entire ACH process. Here’s what happens every time you send or receive money through the ACH network:

  • Setup: Before you’ll be able to accept any ACH payments, your customer will just need your name or entity’s name, your routing number, and your account number.
  • Payment initiation: The payment starts with the originator, which can be a bank, a business, or an individual. The originator initiates the ACH transfer as either a credit or debit transaction, depending on whether they’re requesting or sending money.
  • Originating bank submits entry: The originator’s bank or payment processor is known as the Originating Depository Financial Institution (ODFI). The ODFI submits the ACH entry after the payment is initiated.
  • Originating bank sends entry batch: All ACH transfers are sent in batches on a predetermined schedule, which is why they’re not instant. Your originating bank sends the ACH entry to an ACH operator at this point.
  • Operator sorts entries: The ACH operator will then sort through all of the transfers in the batch to determine whether the transfer is a credit or debit.
  • Operator sends entries: Next, the operator must transmit the batch of entries to the correct Receiving Depository Financial Institutions (RDFI).
  • Receiving bank ensures sufficient funds: If the transaction involves pulling funds, the receiving bank must verify that the account has enough money in the ODFI. If not, the request will be denied.
  • Receiving bank debits or credits originating bank: Finally, the RDFI debits or credits the recipient’s bank account.

Can you speed up an ACH transfer?

In some ways, it’s hard to believe that all of those steps can be completed in under three business days. While you can’t speed up an ACH transfer, you can ensure it’s sent or received more quickly by sending it earlier in the day, usually before 3pm.

This will increase the chance that your ACH credit or debit is processed on the same day. Many banks also provide guaranteed same-day or next-day service for an additional fee.

Is an ACH deposit fast enough for me? 

So, how long does an ACH take? The answer depends on a few factors, but you should expect it to take anywhere from one to three days. While wire transfers are often faster, ACH transfers provide these other benefits:

  • Lower fees: Wire transfers can cost up to $35 each and credit card transactions cost about 2% of the payment amount. ACH payments, however, usually cost under $1, depending on your bank. For example, ACH transfers with North One are free. 
  • Repeatable: If you need to set up recurring payments to a vendor or landlord, it’s easy to do with an ACH transfer. Depending on your bank, it can take just a couple clicks. 
  • Reversible: ACH transfers can be reversed, so there’s no worry if you accidentally send money to the wrong person or business.

Ready to set up an ACH transfer?

Now that you know how long an ACH transfer takes to process, you’re ready to start using this system. Get in touch with North One to learn more about how to make ACH payments work for your small business.