ACH Payments Network: Paying Contractors and Suppliers Across the US

What is an ACH Payment?

The Automated Clearing House (ACH) Network is the United States’ electronic network for sending and receiving financial transactions. It was launched in the late 70s, in hopes of replacing paper checks and making payments within the United States much faster and more streamlined. Today, an estimated $40 Trillion USD flows through the ACH network annually.

The ACH network clears transactions daily, meaning most transactions sent through the network arrive the next business day. Trolley uses the ACH network to help US businesses pay their US-based contractors and suppliers. Recipients can be individuals or businesses.

Below are some frequently asked questions and answers when it comes to sending money via ACH:

What is required to send someone an ACH payment?

Before sending ACH payments, the sender needs to collect some information from the recipient. Trolley makes that task easy with our Recipient Widget, which is a white-label form that you can embed into your platform, or host on a white-label URL like yourcompany.portal.trolley.com.

The Recipient Widget securely collects banking info from Recipients and saves it in Trolley, while also validating that the banking information entered is correct. The needed information is:

• Recipient Type (Business vs Individual)
• Name (First Name and Last Name / Business Name)
• Email
• Street Address
• Routing/ABA Number
• Account Number
• Account Holder Name

The Recipient Widget means recipients can enter this information themselves and our customers don’t have to re-type or copy-and-paste this data.

Trolley won’t let you send a payment to a recipient until you’ve collected all the information needed for a successful transaction.

How long do ACH payments take?

Today, countries such as Canada, Australia, and countries in Europe have instant transfers between domestic bank accounts. Many people have come to expect transactions to be faster than one business day or instant. The ACH network has not had many changes since the late 1990s, therefore ACH transactions are still next business day, with a cutoff around the end of the business day 4PM or 3PM EST for most financial institutions.

There is a new network called Real-Time Payments (RTP), that has launched in the US and is being adopted by major financial institutions. The RTP network is offered via The Clearing House (TCH) and is most similar to an “instant ACH network”.

In addition to the RTP network, another means of instant payments is being offered via Visa and MasterCard using their debit card networks. This offering is called Visa Direct and MasterCard Send. Payments through this network can be send to an existing Visa or MasterCard debit card.

Trolley will begin to offer these options as payout methods soon, as demand grows.

These new, instant payout methods are currently a premium service in the US, and typically more costly than ACH. At the moment, most merchants pass these fees to recipients in exchange for convenience of receiving funds faster. It’s expected that the cost of RTP, Visa Direct, and MasterCard Send transactions will come down in the next few years as it is more widely adopted.

What’s the difference between an ACH payment and a wire payment?

Both ACH and wire payments are used to move money from your bank account to another bank account. You can use them to pay another person, or even a bill.

According to Investopedia, the main difference between the two is that an ACH transfer is completed through a clearing house and can be used to process direct payments or direct deposits. Wire transfers allow for the direct movement of money from one bank account to another, typically for a fee.

In terms of cost, ACH payments are usually free, while banks usually charge fees for domestic or international wire transfers. However, wires are sent quicker, so you are paying for the convenience and speed.

Ultimately, deciding which to use comes down to your particular needs, where you are sending the money, and how quickly you need it to reach the recipient.

How do I make an ACH payment?

Trolley enables you to send ACH payments online (without visiting the bank), and automate them. Trolley also enables you to easily collect and validate payout information from the recipients. It can be integrated with the rest of your business processes & software (account systems, Google Sheets, etc), and it supports CSV uploads as well as manual entry of payout information.

Many businesses have access to an ACH payments portal via their online banking system. This is highly dependent on the type of account that the business has with the bank.

Some banking systems even have a CSV upload option to send multiple ACH payments at once. Banks will not help businesses collect banking information from recipients, so that will be up to you and your development team to collect and securely store that information.