In both cases, the payer initiates a funds transfer to another bank account, with businesses and government agencies using ACH-based direct deposits to pay salaries, benefits and tax refunds. direct depositĪ “direct deposit” is an informal term for an ACH credit. For example, electronic transfers could happen via the ACH network, or sent by wire transfer. Since almost any electronic funds transfer could be called an ‘eCheck’, the only difference between the two is the categorization.Īn eCheck is a type of ACH payment because it’s categorized as a direct deposit, while ACH payments encompass a variety of electronic payment methods. eCheckĪCH payments and eChecks are technically the same. But how do they compare to other popular methods? ACH vs. How do ACH debits differ from similar payment methods?ĪCH debits are one of the most secure and cost-effective ways for businesses to receive funds. This type of ACH debit entry is commonly used by credit card companies, government agencies, online retailers and nonprofits, offering the cheapest way for businesses to complete ACH debits.

This is when you use the internet to authorize a pull transaction, which can be a one-off or recurring payment. This type of entry can be either an ACH credit or debit, depending on whether you’re pushing or pulling funds. This is when the payee initiates a pull transaction from an electronic terminal, usually an ATM. This is when your POS system debits the customer’s bank account for each card payment on the electronic terminal. When your business receives a paper check, it gets processed as an e-check and appears as an ACH transaction on the payer’s statement. With automated ACH debits, businesses can spend less time chasing late or missed payments. ACH debits are ideal for recurring payments because the amount and due date are agreed in advance. Many businesses accept recurring payments, such as utility bills, subscriptions, and loan repayments, via ACH debit.

The ACH network supports different types of debit payments, including: Recurring payments ACH credits are “push” transactions initiated by the payer, moving money from one account to another.ĪCH payments are governed by the National Automated Clearing House Association (NACHA), offering a secure way to transfer funds electronically. credit: What’s the difference?ĪCH debits are “pull” transactions initiated by the payee, withdrawing funds from the payer’s account – after authorization from the payer. For businesses, ACH debits enable them to automatically receive recurring payments, saving the business time and money on collecting late or missed payments. For customers, it’s a secure and easy way to pay automatically, removing the need to enter credit card details for every purchase. ACH debits usually take two to five business days to clear, but you can pay extra for same-day processing.ĪCH debits are beneficial for both parties. How does ACH debit work?Īlso known as “autopay”, ACH debits involve the payee initiating an authorized transaction that pulls funds from the payer’s account, moving funds across the ACH network.įor ACH debits to work, the payer must provide information to the payee, including routing and bank account numbers, and then agree to the billed by the business. As they’re automated, ACH debits can also reduce the risk of late or unsuccessful payments.

These types of payments are common, offering a secure and cost-effective way for businesses to accept payments.įor example, businesses and government agencies regularly use ACH debits to accept recurring monthly payments, such as subscriptions or loan repayments. In an ACH debit payment, both parties must authorize the transaction, meaning the payer (usually a customer) must give the payee (usually a business) permission to pull funds from their account. Unlike ACH credits, ACH debits are initiated by the payee, not the payer. Automated Clearing House (ACH) debits are electronic transactions that “pull” funds from the payer’s account and move it to the payee’s account.

Debit vs credit ach