What is an ACH Payment?

What is an ACH Payment?

ACH payments are processed through a central network in the United States, managed by NACHA (National Automated Clearing House Association). These payments are commonly used for things like direct deposits, bill payments, and other regular transactions. ACH payments are usually for domestic transactions within the United States. However, if the Payment Service Provider (PSP) in the UK has a relationship with a bank in the US or a third-party provider, they can facilitate the domestic leg of the transaction, making it possible for UK businesses and individuals to send or receive money via ACH.

Key Characteristics of ACH Payments:

• Batch Processing: ACH transactions are processed in batches at set intervals throughout the day, making them less suitable for urgent payments.
• Cost-Effective: ACH transfers generally have lower fees compared to wire transfers, making them attractive for routine transactions.
• US-Centric: The ACH network primarily supports transactions within the United States. For UK recipients, the funds are often transferred via intermediary banks that handle cross-border transactions.

Sending and Receiving ACH Payments in the UK

For UK individuals and businesses, ACH payments offer a cost-effective way to send and receive US dollars. Here’s what you need to know:

To send or receive money via ACH, you will need the following details:

• Account Number: The US bank account number.
• ACH Routing Number: The bank’s routing number for ACH transactions.
• Name and Address: The full name and address of the account holder.

Rutland FX can make this process even easier by providing you with a US Dollar account that accepts ACH payments. This account is usually held with Community Federal Savings Bank in the USA.

Alternatives to ACH: Fedwire and SWIFT

While ACH is a cost-effective option for non-urgent transactions, Fedwire and SWIFT offer alternative methods for transferring funds, each with distinct features.

Fedwire

Fedwire is a real-time gross settlement system operated by the Federal Reserve Banks. It is used for high-value or time-critical transactions.

• Speed: Fedwire transfers are processed in real-time, making them ideal for urgent payments.
• Cost: Higher fees compared to ACH, justified by the immediacy and security of the service.
• Accessibility: Primarily used for domestic transactions within the US, but can be used for international payments through intermediary banks.

To send or receive money via Fedwire, you will need the following details:

• Account Number: The bank account number.
• Fedwire Routing Number: The bank’s routing number for Fedwire transactions.
• Name and Address: The full name and address of the account holder.

SWIFT

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a global messaging network used for international money transfers between banks.

• Global Reach: SWIFT is used by over 11,000 financial institutions in more than 200 countries, making it the standard for international wire transfers.
• Speed and Cost: Transfers typically take 1-2 business days and can be more expensive due to higher processing fees and currency conversion costs.
• Security: SWIFT transactions are highly secure, utilising a standardised system for sending and receiving money across borders.

To send or receive money via SWIFT, you will need the following details:

• IBAN: The International Bank Account Number.
• SWIFT Code: The bank’s SWIFT/BIC code.
• Name and Address: The full name and address of the account holder.

Conclusion

ACH payments offer a cost-effective and reliable method for UK individuals and businesses to send and receive US dollars, especially for routine transactions. However, for urgent or high-value transfers, Fedwire and SWIFT provide valuable alternatives with their real-time processing and global reach, respectively. Understanding the differences between these methods ensures that UK recipients can choose the most appropriate service for their financial needs.