ACH (Automated Clearing House)

ACH is how the US moves money between bank accounts without cards: payroll, mortgage payments, B2B invoices, subscription debits. Transactions are either credits (pushing funds, like payroll) or debits (pulling funds, like a gym membership charge). Unlike card networks, ACH processes in batches through the Federal Reserve and The Clearing House, with rules set by NACHA.

How it works

Every ACH entry carries a Standard Entry Class (SEC) code describing how authorization was obtained: WEB for online consumer debits, PPD for pre-authorized consumer payments, CCD for corporate transfers, TEL for phone authorizations. The originator’s bank (ODFI) submits batches; the receiver’s bank (RDFI) posts them. Standard entries settle in one to two banking days, and same-day ACH windows handle time-critical payments for an added fee. Costs are flat rather than percentage-based (typically cents per transaction versus 2–3% for cards), which is why ACH dominates large-ticket and recurring B2B payments. A $5,000 invoice might cost $0.50 to collect by ACH versus $125 or more by credit card.

Why it matters, including the risk

ACH has no real-time authorization: a debit can be returned days later for insufficient funds (R01) or, more seriously, as unauthorized; consumers have 60 days to dispute unauthorized debits. NACHA caps return rates (0.5% for unauthorized returns) and originators that exceed them face consequences much like card-network chargeback programs. A good processor validates accounts before origination, tracks return rates per merchant, and supports the right SEC codes for each use case.

QorPay processes ACH natively on QorCommerce alongside card payments, with support for standard SEC codes and unified reporting across payment types.