What Is ACH (Automated Clearing House)?
Definition
An electronic network used for processing financial transactions like direct deposits and bill payments between banks.
Example: "My employer pays me through ACH direct deposit every two weeks."
Why It Matters
ACH powers the vast majority of electronic money movement in the United States, processing billions of transactions each year. When your paycheck lands in your account via direct deposit, that is ACH. When you pay a utility bill online from your bank account, that is also ACH. Unlike wire transfers, ACH transactions are typically free or very low cost, but they take one to three business days to settle. Understanding ACH helps you know why some payments aren't instant and how to plan around processing times.
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