How Long Do ACH Payments Take?

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Automated Clearing House (ACH) is an electronic network that facilitates financial transactions between banks and financial institutions in the United States. . It is operated by the National Automated Clearing House Association (NACHA) and handles a variety of transactions, including:

• Payroll direct deposits
• Tax payments and refunds
• Vendor payments
• Consumer payments

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On average, about twenty-five billion transactions are processed annually through the ACH network, amounting to trillions of dollars in value. 

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In this blog, we’ll discuss how long ACH payments take, and what you can expect when using the ACH system.

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What are the Benefits of ACH Payments?

ACH payments offer several advantages over traditional paper checks or wire transfers, such as lower processing fees, faster processing times, greater convenience, and increased security. In addition, ACH payments are often preferred to the traditional method of making payments by check because it can be complicated to verify a check. 

ACH Payment Processing Time

So, if you want to make an ACH transfer online, how long would it take? 

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An ACH payment typically takes between 1-3 business days to process. That said, the exact time frame depends on several factors, including which banks are involved, what kind of transaction the ACH transfer is, and what time of day the transaction was initiated.  

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If a sender initiates the ACH payment early in the day, it may be possible for the ACH network to process it same-day. Transactions initiated later in the day or on weekends or holidays, however, may take longer to process. 

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It’s also important to note that some banks have their own ACH processing rules and timelines, which may add additional time to the transaction’s total processing time. Because of this, it’s smart to check with your bank or financial institution for their specific processing times and policies related to ACH payments.

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Factors that Influence ACH Payment Processing Times

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Several factors can impact how quickly your ACH payment processes. These factors include the settlement window, transaction type, if a holiday occurs during processing, and all banks involved. Let’s look into each of these factors in more detail:

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Settlement Window

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The ACH network operates pre-defined settlement windows determining when transactions can be processed. The first is at 10:30 AM Eastern Time, and the second is at 3:00 PM Eastern Time. Transactions submitted after the final cut-off time for the day are processed the next business day.

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Transaction Type

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The processing times can vary depending on the type of transactions you are making. For example, ACH credits (such as payroll and direct deposit) are generally credited to the receiver's account on the next business day. ACH debits, however (such as vendor payments and consumer bills), take more time to process due to the need for verification and approval.

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Holidays and Weekends

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Transactions submitted on federal holidays or weekends will be processed on the next business day.

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Originating Bank and Receiving Bank

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The time taken to process ACH payments can vary based on the processing times of the originating bank (which initiates the transfer of funds) and the receiving bank (which receives the funds). In addition, it is common for certain banks to have different processing times, meaning that an identical transaction made to different banks might incur different waiting times. 

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How to Ensure Timely ACH Payments

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You can take several steps to ensure your ACH payment is processed on time. Here, we’ll explore each of these steps in detail.

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Schedule Payments in Advance

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Schedule ACH payments in advance to allow enough time for processing. This can help avoid late payment fees or other inconveniences.

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Prepare to Meet Deadlines

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Ensure that payments are submitted on or before the submission deadline to allow enough time for processing. We recommend submitting your ACH payment three days before the scheduled due date. This can help avoid delays and rejected transactions.

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Choose Reliable Payment Partners

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Choose banks and payment service providers with reliable payment processing systems and competitive processing fees. This can help ensure faster processing times and increase the chances of successful transactions.

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In Summary

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ACH payments are a reliable and cost-efficient method for transferring funds between financial institutions in the US, with the general processing time for payments being one to three business days. Therefore, it’s important to schedule payments with these timeframes in mind to avoid any inconveniences down the line.

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