Estimating ACH Transfer Times

If you allow ACH transfers for your business, then your clients will need to be able to estimate when their money will be deposited into or withdrawn from their bank account.

Estimating these transfer times will offer a smoother customer experience as customers will not be continually nagging your company about when the money transfer will be completed.

While ACH payment times are fairly standard, they will vary depending on the ACH transaction method that you use.

Here is Sila’s guide to estimating ACH transfer times.

How ACH Payment Processing Works

If you want to send an ACH deposit or direct deposit, you’ll need to allow ACH transfers and payment processing.

ACH payment processing can be done through a third-party payment processor (TPPP), online banking with a bank or credit union, ACH payment API, or with banking as a service (BaaS) technology. No matter how the payment is processed, the customer still needs to be verified and certain regulations need to be followed.

The transfer timeline that is standard in the ACH transaction will provide security when processing ACH transactions and allow the payment processor the time to verify the payment is valid. So, it is important that you follow these guidelines and inform clients that these transfer times are necessary for the security of the transaction.

How your ACH payment is processed will depend on the service that you use. For example, in order to send an ACH transaction (in the form of an ACH debit or ACH credit) the following information is provided to the bank:

  • The name of the bank account of the recipient (or the other party)
  • Their bank account number
  • Their ABA or routing number
  • Sometimes their transit number
  • The amount, date, and frequency of the ACH transfer
  • And of course your banking information

That request is then sent through the ACH Network in batch form and to the Clearing House to be approved.

Once the ACH payment is approved, the funds will be deposited into the appropriate account. If the payment is not approved, the receiving bank, also referred to as the Receiving Depository Financial Institution (RDFI) will receive a return code and will have to inform the bank that submitted the ACH request (known as the Originating Depository Financial Institution, or ODFI) of the error.

Because return codes are the backbone of ACH transfers, it is important to ensure that enough time is allotted for their return.

Return codes take about 48 hours when processing a standard ACH transaction and less than 24 hours when processing a same day ACH. Therefore, estimating the ACH transfer time will depend on the method of ACH processing that your business needs.

Same day ACH Transfers

Same day ACH transfers are a form of ACH transactions that allow TPPPs, ACH payment APIs, banks and credit unions to submit an ACH file more frequently. While the process is not necessarily completed in one day, more frequent processing times are available and it speeds up the ACH process.

Compared to the standard ACH processing timelines, which take anywhere from three to four business days, same day ACH transfers take about one business day. This is because same day ACH requests can be submitted before two windows on any given business day.

Right now the first window is 10:30 AM ET with the settlement occurring at 1:00 PM ET. The second window deadline is 2:45 PM ET, with settlement occurring at 5:00 PM ET. While it is altogether possible that the transaction will be completed at the settlement time stamp, the payment may be held up for small processing factors based on the payment processor.

How Long Do ACH Transactions Take?

On average, the ACH transfer will take about four business days for standard ACH payments to be completed, and one business day for a same day ACH payment to be completed. ACH transfers abide by banking holidays, so ACH payments will be delayed (or expedited) if submitted on or scheduled to occur on a weekend or bank holiday.

When submitting a standard ACH, the entry request is not submitted until the next day. Then the payment is sent to the Clearing House. While it is automated, the Clearing House needs at least 48 hours to ensure that the payment is not fraudulent.

Therefore if you are submitting an ACH payment under these standard timelines, you must wait the entire four business day period to ensure compliance. This is because return codes could be sent out within that 48 time period and then the bank transfer would be rejected. If the financial institution were to move forward with the money transfer without waiting for these potential return codes, they could lose the money.

Same day ACH transactions take a much shorter time period compared to standard transfers. This is usually because both the bank and the client have been vetted through the National Automated Clearing House Association (NACHA) and their payment can be trusted. Additionally, submitting payments through same day ACH transactions means that the payment can be submitted for processing sooner rather than the next day.

ACH payments are comparatively slower than wire transfers but are often more affordable than sending money by wire transfer or paying with a credit card.

How to Make ACH Transfers Faster

Facilitating ACH transfers allows customers to do more with their money. If you want to implement fast ACH transfers, then you’ll want to find a service, such as a third-party payment processor, Banking as a Service option, ACH payments API, or a financial institution that will facilitate this.

When searching for an ACH payment provider , make sure that Know Your Customer (KYC) regulations are set up and can provide secure bank account linking. As well, you should be able to submit under same day ACH. Make sure that the financial institution is allowed to do this as not all financial institutions are cleared as ACH Operators for same day processing.

ACH payment processing facilitated through an app can be connected to an eCommerce website or financial system. By implementing an ACH app or ACH payments API, such as the Sila app, a company can customize the app for the unique needs of its clients. Money can then be sent from any currency into the USD as the transfer is sent through the Ethereum blockchain.

With faster processing times and the ability to process international payments at affordable rates, Sila can move money faster and keep your company connected to the fast-paced world.