ACH Payment Processing Times: How to Make it More Efficient

In today’s increasingly cashless society, processing electronic payments is a necessity for business survival. As a result, most businesses offer credit card processing to maximize their sales. Although convenient for customers, processing credit cards can be costly for businesses. Many merchants are exploring other online payment methods to cut their processing costs.

ACH payments offer a great alternative to credit card processing. But businesses have avoided ACH transfers for years because they either don’t understand how it works or are concerned about processing delays. In this post, we’ll explain how ACH transfers work, discuss ACH payment processing times, and provide solutions to make ACH processing more efficient.

What are ACH Payments?

Before we delve into ACH processing time frames, let’s first discuss what ACH payments are. ACH ⏤ which stands for Automated Clearing House ⏤ is an electronic funds transfer method that moves money from one bank account to another within the United States. ACH transactions are governed by the National Automated Clearing House Association(NACHA).

While card payments are processed by the credit card network, ACH transfers go through the Automated Clearing House system. It’s not just banks that use this system. Payment apps like PayPal and Venmo also use ACH to deposit money into your bank account. If you’ve ever paid a bill online or received a direct deposit, you’ve sent or received an ACH payment.

Types of ACH Payments

ACH payment processing times depend on the type of ACH transaction. There are two types of ACH payments: ACH debit and ACH credit.

ACH debit ⏤ also known as ACH pull transactions ⏤ refers to payments that are initiated by the receiver of the funds. ACH debits authorize organizations to pull what they’re owed from your bank account. Automatic billing is a good example of ACH debits. NACHA’s rules specify that ACH debit transactions must be processed within one business day.

ACH credit ⏤ also known as ACH push transactions ⏤ refers to payments that are initiated by the sender of the funds. Examples of these transactions include getting paid by your employer or receiving government benefits like social security. Since these transaction requests are not immediately sent, credit transfers have longer ACH processing time frames than debit ones.

How Do ACH Transfers Work?

To learn about ACH payment processing times, it’s important that you understand how ACH transfers work. ACH transactions are processed in batches that are like bulk digital mail. Each transfer request is packaged as a message within a large bundle of messages and then sent in bulk as outgoing mail by the originating bank to the ACH network.

After receiving the batch, an ACH operator ⏤ either the Federal Reserve or the Clearing House ⏤ repackages the transfer requests by recipient. The new bundle is then sent to the bank receiving the payments. The ACH network sends batches at five regular intervals during each business day. As of March 2021, batches are sent at 6am, 12pm, 4pm, 5:30pm, and 10pm ET.

How Long Do ACH Transfers Take?

Unlike other electronic payment methods that are processed in real-time, ACH transactions are accumulated and processed in bulk. This batch processing method slows down the transfer of ACH payments between accounts. ACH processing time frames can range from a few hours to five days. The time it takes for ACH funds to clear will depend on several factors.

Payment type, transaction errors, and the time a transfer is initiated can all affect ACH payment processing times. Sending ACH credit, having non-sufficient funds, or transferring money on a Friday can delay processing by one to two days. NACHA introduced same-day ACH funding in 2018, but many banks don’t offer this service or charge extra fees for expediting the process.

The ACH Funding Cycle

On average, the typical ACH funding process takes three days. Why so long, you ask? This three-day process ensures that every step of the transfer is verified so that your business does not receive deposits from accounts with insufficient funds. Keep in mind that some banks may hold funds for a period of time, so ACH settlement can take longer than three days.

Here is the standard time frame for ACH payment processing:

Day 0

Known as the initiation day, this day is when the transaction is entered. The merchant provides the amount to be paid. The customer authorizes the merchant to initiate the transaction.

Day 1

The originating bank debits the customer’s account and sends the file to the ACH operator. The ACH network routes the file to the receiving bank.

Day 2

The receiving bank processes the payment request. If there are no transaction errors, the merchant’s bank will clear the payment.

Day 3

The funds are deposited into the merchant’s account. If the receiving bank does not place any holds on the deposit, the money is available for use right away.

How to Make ACH Processing More Efficient

Although typical ACH payment processing times average three days, there are ways to speed up the funding times. Much of this processing time is spent on authenticating transaction details and preventing payment fraud. Working with an ACH processor that can verify transactions before a transfer is initiated can significantly cut down ACH processing time frames.

Modern ACH processors like SeamlessChex employ advanced payment technologies to make bank-to-bank transfers more efficient. Seamless Chex provides real-time account authentication and bank balance verification to validate transactions before they nter the ACH network. Our upfront verification service helps reduce ACH payment processing time to one business day.

How Does SeamlessChex Work?

SeamlessChex offers a secure and easy-to-use platform to send and receive ACH payments. We have a simple online application process and require no credit checks so businesses can set up their accounts quickly. All you need is your basic business information to sign up for our fast ACH services.

Once you complete our hassle-free signup process, we’ll verify your account. We specialize in high risk and understand your industry. When you get a Seamless Chex account, your customers can pay via verified ACH transfers in three simple steps. This is how Seamless Chex works to speed up ACH payment processing time:

1. On the Seamless Chex platform, enter the customer’s name, email, and payment amount. Our system sends an eCheck link to the customer by email. If you have an ecommerce website, your customer can click the “Pay With Bank” button.
2. Your customer enters their banking information. Our platform verifies bank account ownership and funds availability before processing the payment.
3. After successful transaction verification, funds are transferred to your bank.

Sign Up for Fast ACH Payment Processing

Payment processing times are important for cash flow management. Quick payment settlement can help you mitigate cash flow issues. Although typical ACH processing time frames are longer than other electronic funds transfers, you can make the process more efficient by choosing the right ACH payment processing company.

With payment pre-validation and optimized processes, Seamless Chex can shorten ACH payment processing time from the standard three days to just one business day. Sign up for a free trial to see our fast ACH payments in action. If you need more information, contact us to learn how our quick and cost-effective ACH transfers can help your business grow.