Automated Clearing House, ACH, transactions normally take one business day to process. Therefore, ACH deposits are not subject to the same hold times that enable banks to delay the availability of funds from check deposits. However, some ACH deposits can take longer to process, and in a worse case scenario, a bank may not accept an ACH deposit at all.
For the most part, ACH transactions are made available one business day after the day they were processed, although in some cases, funds are ready the same day.
In 1974, several regional clearinghouses around the United States merged together to create the National Automated Clearinghouse Association. At that time, check writing had reached unprecedented levels, but it took days and sometimes weeks for banks to collect the funds from check deposits. The NACHA was designed to facilitate the electronic transfer of funds across state lines. State laws were amended to allow for interstate electronic transactions and by 1978, banks located in states across the country could transfer funds electronically. In 2016, U.S. banks originated more than $25 billion ACH transfers.
An ACH transaction involves two institutions: the originating and the receiving bank. Under NACHA rules, the receiving bank must make funds from an ACH deposit available to the account holder on the business day following the day that the funds are received. Certain ACH deposits such as payments made the by the United States Treasury, are credited to accounts on the actual day that the ACH transfer occurs. Generally, banks make all ACH deposits available on the day that funds are received, but your bank's depository agreement must specify whether your bank gives same day credit or next day credit.
Originator of the ACH
If you have deposit accounts at two different banks, you can arrange for one of your banks to originate an ACH debit to transfer money held at your other bank. When this occurs, the receiving bank acts as both the originator and receiver. Such a transaction does not count as a deposit but neither does the NACHA classify it as a payment. Consequently, under NACHA rules your bank can place a two-business day hold on a transfer that it initiates to collect money from your account at another bank.
To process an ACH deposit, the originating bank must have the account number and the routing number for the destination account. Routing numbers act like account numbers to identify banks. If a bank receives an ACH with an invalid account or routing number, it can return it to the originating bank. Furthermore, banks have to accept correctly processed ACH deposits into checking accounts, but banks do not have to accept ACH deposits into savings accounts. Therefore, before arranging to have money sent via a direct deposit into your savings account, you must find out if your bank even accepts such transactions.
- Comptroller of the Currency Administrator of National Banks; Answers About Funds Availability; August 2010
- NACHA: Homepage
- PaySimple: 7 Things You Should Know Before Setting Up ACH Billing
- DWOLLA: Understanding the ACH Returns Process
- NACHA: ACH Volume Grows to More Than 25 Billion Payments and $43 Trillion in Value in 2016