They are especially convenient for rent and utility bills as the payee can automatically charge the payor with the up-to-date sum each month with no additional action needed. What types of payments are made via ACH debit?ĪCH debit is typically used for recurring payments, including those that vary in amount from time to time. Upon the account owner’s approval, which is typically given beforehand, the money is deducted from their account and sent to the requesting party. This type of ACH payment is initiated by the recipient of the funds, who submits a payment request to the payor’s bank. A form of ACH credit called direct deposit is often used by employers to pay salaries.ĪCH credit is the most common type of ACH for business-to-business (B2B) transactions, and it’s also the type used by Melio and other digital accounts payable tools. The government may use it to send social benefits to citizens, for example, while a business can pay for goods and services. What types of payments are made via ACH credit? ĪCH credit is used for a variety of payments. They are initiated by the payor and sent directly to the recipient’s bank account. What is ACH credit?ĪCH credit payments are like any other bank transfer. Below, we’ll cover the basic definitions and uses of each. There are two main types of ACH payments and each of them is used for different purposes: ACH credit and ACH debit. Let’s dive right in so you can start using ACH for your business. We will also explain the differences and similarities between them, other common nicknames, and what each is used for. In this article, we will quickly walk you through the two main types of ACH you may encounter-ACH credit and ACH debit. Many people, however, tend to get confused by the different types of ACH payments and remain reluctant to use them. Treasury, and state banking authorities.Īs a form of electronic funds transfer (EFT), ACH (Automated Clearing House) payments can be made online in just a few simple steps, which helps businesses save time on managing accounts payable. To ensure their safety, they are overseen by nonprofit organization NACHA (the National Automated Clearing House Association), which regulates the whole process in collaboration with government agencies, including the Federal Reserve, U.S. ACH transfers are a reliable, inexpensive, and safe method for businesses to send and receive payments.
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