What Is an ACH Payment?

ACH (Automated Clearing House) is a network used for sending money electronically between bank accounts in the U.S. It’s often used for:

• Direct deposit of paychecks ?

• Paying bills online ?

• Transferring money between accounts ?

The ACH Payment Lifecycle (Step-by-Step)

1. Authorization

The customer gives permission to the business (merchant) to take money from their bank account.
 This can be done through a signed form, online checkbox, or verbal agreement (with proof).

2. Initiation

The business (or their payment provider, like Forte) sends the payment request to the bank using the ACH network.
 This usually happens in a batch (group of payments) once or twice per day.

3. Processing by the Originating Bank

The business’s bank (called the ODFI – Originating Depository Financial Institution) receives the ACH file and sends it to the ACH network.

4. Clearing and Settlement

The ACH network (usually operated by the Federal Reserve or a clearinghouse) routes the payment to the customer’s bank (called the RDFI – Receiving Depository Financial Institution).
 This happens overnight or the next business day.

5. Deposit or Debit

The customer’s bank processes the debit (pulls money from their account), and the funds are transferred to the business.

• This usually happens within 1–3 business days.

• In Same Day ACH, it can happen the same day if submitted early.

6. Notification & Confirmation

The business gets a confirmation from the bank or payment processor that the transaction is complete.
 Funds are now available in the business’s bank account.

7. Returns (if something goes wrong)

If there’s an issue—like insufficient funds, a closed account, or fraud—the customer’s bank can return the payment within a set time (usually 2–60 days depending on the reason).

Quick Summary