How Long Does an ACH Transfer Take?

The popular Tom Petty song lyric, “the waiting is the hardest part,” rings true in many aspects of life, especially concerning money! Whether you’re waiting to get paid or waiting for a payment to be accepted so you can move forward in the real estate process, it’s hard to be patient. Luckily, the more technology advances, the faster people can get paid. That’s why ACH transfers have become among the most popular ways to pay. So, what exactly is this payment option, and how long does an ACH transfer take? Here’s what you need to know before you send or accept money this way.

What Is an ACH Transfer?

ACH is short for Automated Clearing House, because that’s the electronic system ACH transfers use to process funds from one financial institution to another. This process involves pulling money from one account to deposit into another account, all without ever touching cash or paper checks since it’s all done electronically.

Basically, if you’ve ever been paid via direct deposit or a digital payment service like PayPal, you’ve gotten an ACH transfer. And if you’ve paid a bill online, you’ve facilitated an ACH payment.

As of 2019, the ACH Network has processed nearly 25 billion electronic payments, totaling more than $55 trillion. Expect these numbers to grow in the near future, meaning now is a good time to learn more about ACH payments if you’re not already familiar with them!

Now that you know the basics of this payment type, it’s time to learn the answers to some popular questions, such as how long does an ACH transfer take, and how does the process work exactly? Keep reading to find out.

How Long Does an ACH Transfer Take on Average?

Traditionally, a standard ACH transfer would take three to four business days. This is because it would take some time for a bank to send each ACH request, verify that there’s enough money in the account, and wait for the receiving bank to accept the request. This would typically take 48 hours, at minimum.

Plus, many banks process ACH transfers in batches only a few times per day. Some even only process them once per day, so if you miss the cutoff for the batch that day, you’ll have to wait another day for processing to take place.

That being said, in recent years, it’s more common for ACH transfers to take only one to two business days. This is because many banks now allow same-day or next-day ACH transfers. So as long as the request is submitted before the cutoff for the day — the time when the bank processes ACH transfers — it’s possible for the money to be received within 24 hours.

This is why the exact time it takes for an ACH transfer to be approved can vary based on the bank. If same-day or next-day transfers are important to you, it’s a good idea to find a bank that offers these — preferably without charging an extra fee!

Also keep in mind that many banks do have limits on how much you can send or receive in ACH transfers. These ACH transfer limits are often about $25,000 per day, but some banks go up to $100,000 depending on the type of account. If you plan on sending or receiving a lot of money via ACH transfer often, make sure the bank you choose has high daily limits.

How Do ACH Transfers Work?

If you’re still not sure if this method of payment is right for you or your real estate clients, understanding how it works might offer some peace of mind. Let’s say you’re expecting your paycheck to be direct deposited into your bank account. This means your employer initiates the payment by sending an ACH request to its bank.

The bank then forwards the request to the ACH operator, which can be either the Clearing House or the Federal Reserve. Once it’s clear the employer’s bank account has enough money to pay the ACH payment request, the funds are electronically pulled from that account. They’re then deposited into your bank account.

As you can see, everything happens electronically between financial institutions, so no cash ever changes hands. Also note that when you’re paid via direct deposit, that’s an example of an ACH credit, which is also called a push transaction. On the other hand, when you pay a bill online, that’s referred to as an ACH debit, also called a pull transaction.

So now you have some idea of how this process works, and we’ve answered the common question “how long does an ACH transfer take?” But why is this possibly the right payment method for your real estate clients? Keep reading to find out.

The Benefits of ACH Transfers

ACH transfers are usually pretty fast, especially when using a bank that offers same-day options. But there are additional reasons to use this payment method, aside from how quickly it’s possible to send and receive money.

First, there’s the ease of use when it comes to paying and receiving money this way. Either way, all you have to do is provide your bank account information. Then, if you’re ready to pay someone via ACH transfer, you simply need to choose the amount you’re paying and the day you want to initiate the payment. This just involves pressing a few buttons on the screen — which takes less time than writing and mailing a check!

If it’s going to be a regular payment every month, it’s simple to automate the process by telling the bank to take out a certain amount monthly, making it even easier to pay bills. It’s especially easy when compared to the alternative of writing a check, which you’d then have to deliver either by mail or by driving to a business to hand it to someone. When the payment is completed electronically — and tracked through the bank — you don’t have to worry about the possibility of a check getting lost in the mail or the recipient taking too long to cash it.

Finally, ACH transfers are considered a very safe way to pay. Unlike checks, the bank account number isn’t exposed every time you pay a bill. And if you’re getting paid by ACH transfer, you don’t have to worry about the possibility of bounced checks.

Plus, ACH transfers don’t come with the same security issues as wire transfers. After all, wire transfers are instant — meaning there’s no time taken for verification — and they’re not reversible. This is why cyber criminals often request fraudulent payments through wire and not ACH, as their victims can’t get their money back once they realize they were tricked into sending a wire transfer! Not only are ACH transfer reversible when necessary, but they’re also protected by federal law so you have a good chance of getting your money back if there’s evidence of fraud.

All of these benefits — and the fact that the money is usually received within one to two days — add up to ACH transfers being a preferred way to send and receive payments. This is especially the case with major transactions, like buying and selling houses. So if you work in the real estate industry and need a secure, fast way for clients to send and receive payments, ACH transfers may be the right choice. If you want to learn about how can help you and your clients with real estate transactions on a secure platform, Schedule a Demo today to talk to our team!