What is an Automated Clearing House (ACH)?

An Automated Clearing House (ACH) is a US-based electronic network for processing financial transactions between banks and financial institutions. Common use cases include payroll direct deposit, bill payments, B2B transfers, contractor payouts, and government benefit disbursements.

ACH is operated by Nacha and governed by the Federal Reserve and the Electronic Funds Transfer Act (EFTA). Same-Day ACH is now the standard for most transactions, with a per-transaction limit of $1 million, making it suitable for a wide range of business and personal payments.

While ACH is more secure and efficient than paper-based methods, fraud remains a real consideration. Account takeover schemes and business email compromise attacks targeting ACH transactions are increasingly common, and organizations should have appropriate verification and monitoring controls in place.

ACH operates alongside two real-time payment alternatives: RTP (The Clearing House) and FedNow (Federal Reserve, launched 2023).

Both offer instant, 24/7 settlement, whereas ACH, even with Same-Day processing (operates within defined processing windows).
For payments where timing is critical, RTP or FedNow may be more appropriate.

ACH is a US-only rail. International payment workflows typically use ACH for the domestic leg, paired with SEPA, wire transfers, or other cross-border infrastructure for the international leg.