Many people ask this question even though they’ve seen hundreds of ACH’s in their lives.

Do you pay any bills with automated payments?  Have you had a job where you were paid by direct deposit?

These are ACH’s.

Let’s start by distinguishing between a wire and an ACH.  A wire is the transfer of funds from one bank account to another that only takes about an hour.  These cost anywhere from $10-$50 per wire, depending on the bank.  Wires are expensive.  (Aside from the originator, they often cost the recipient upwards of $10-$15 just for receiving them.)

ACH’s are cheap and generally cost the originator only about 20-30 cents per transaction.  Like a wire, these are also the transfer of funds from one bank account to another, but they happen overnight.  So, if an ACH is triggered one day, it hits the other bank account the next day.

What Does ACH Stand For?

Automated Clearing House.  ACH’s are electronic and move through a central, federal clearing house for security purposes.  Hence the name.

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