ACH is the US batch network for bank-to-bank transfers, and every transfer is either a credit (push) or a debit (pull). With a credit, the originator's bank pushes funds toward the receiver, the way payroll or vendor payments work. With a debit, the originator pulls funds from the receiver's account after getting authorization, the way bill pay and subscriptions work. Either way, an ODFI originates the entry, an ACH operator routes the batch, and the RDFI delivers it, settling on a scheduled date rather than in real time.
The flow at a glance
Who’s involved
- Originator
- The business or person who starts the entry: pushing a credit or pulling a debit
- ODFI (Originating Depository Financial Institution)
- The originator's bank, which submits the entry into ACH
- ACH operator
- The Federal Reserve (FedACH) or The Clearing House's EPN, which sorts and routes batched entries between banks and computes net positions
- RDFI (Receiving Depository Financial Institution)
- The receiver's bank, which posts the entry to the receiver's account
- Receiver
- The account holder being paid (credit) or charged (debit)
How it moves, step by step
- 1messageOriginator
The originator builds an ACH entry and marks it credit (push money out) or debit (pull money in). For a debit, they must already hold the receiver's authorization to charge the account.
- 2messageODFI
The originator's bank, the ODFI, collects entries into a batch file and submits it to an ACH operator. This is a records exchange, not money moving yet.
- 3messageACH operator
The ACH operator (FedACH or EPN) sorts the batch and routes each entry to the right receiving bank. It is moving instructions and computing the net positions banks owe each other, not pushing the actual cash.
- 4messageRDFI
The receiver's bank, the RDFI, receives the entry and prepares to post it: a credit will land in the receiver's account, a debit will be drawn from it.
- 5moneyODFI and RDFI
On the scheduled settlement date, the banks settle their net positions through accounts at the Federal Reserve. This bank-to-bank movement is when the funds actually shift and become final; the operator computes the net amounts, but the money moves between the banks.
- 6moneyRDFI
The RDFI posts the entry to the receiver's account: for a credit the receiver is paid, for a debit the receiver is charged.
- 7exceptionRDFI
If something is wrong, the RDFI can return the entry: an account-closed or insufficient-funds return is typically quick, while an unauthorized-debit return from a consumer typically has a notably longer window. Treat exact timing as program-specific.
When it’s final
Batch, not real-time. ACH typically settles on a scheduled date, commonly the next business day, with same-day options available for some entries; funds are final at settlement, and return windows mean a posted entry can still be reversed for a period afterward. Exact timing varies by entry type and program.
Common misconceptions
Myth: ACH credit and debit just describe whether money goes in or out of my account.
Reality: Credit vs debit is defined by which direction the originator moves funds, not your account's perspective. In both, the originator initiates the entry: in a credit it pushes funds out, in a debit it pulls funds in from someone else's account.
Myth: ACH is instant once I hit send.
Reality: ACH is a batch system. Entries are grouped, routed by an operator, and settled on a scheduled date rather than the moment you submit, which is why timing is usually next-day rather than real-time.
See it in the studio
Terms in this guide
Sources
- ACH Network Rules and how credit/debit entries work ↗ · Nacha. Rule-making body for the ACH Network; defines ODFI/RDFI roles, credit vs debit, and returns.
- FedACH Services overview ↗ · Federal Reserve Financial Services (operator). One of the two ACH operators that route and net batched entries.
- Automated Clearing House and Fed settlement ↗ · Federal Reserve. Background on ACH and interbank settlement through Reserve accounts.
Educational, plain-English explainers. Not legal, compliance, tax, or financial advice. These cover fundamentals, not current fees, limits, or rates (which change). Rails and parties vary by program and country, so verify specifics against primary sources. Last reviewed June 2026.