What is an ACH payment? Guide for Australian businesses

ACH payments are US-based money transfers used for all sorts of everyday transactions. In 2025, ACH networks processed 35+ billion payments, totalling $93 trillion in value¹, so it’s helpful for Australian businesses to understand how ACH works for international payments.

In this blog, we’ll define what is an ACH payment, how to make and receive them in Australia, and outline the costs and challenges involved. There are also details about using Wise Business to streamline ACH payments and manage all your international finances.

What is an ACH payment?

An ACH payment is an electronic bank-to-bank transfer that’s processed through a network called the Automated Clearing House (ACH), which is managed by Nacha. It’s a US-only system, so any of your domestic business payments made in Australia won’t pass through it.

However, ACH sits behind lots of everyday money movements in the US, where it helps settle two main types of payments:

• Direct deposits - payments from a business to an individual. This covers things like salaries or tax refunds.
• Direct payments - payments made by individuals or businesses, such as utility bills or supplier invoices.

Understanding how these ACH payments work will be valuable if you’re planning to deal regularly with US customers or partners.

Types of ACH transactions: Debits and credits

The two main payment categories, direct deposits and direct payments, are ‘powered’ by two types of ACH transactions. These are:

• ACH credit - known as a ‘push’ payment, this is where money is sent from one account to another. This is the most common for direct deposits, for example, when a business pays a US supplier.
• ACH debit - where money is collected or ‘pulled’ from another account with the account holder's permission. This is typically how direct payments work, such as when a SaaS provider charges and collects a monthly subscription payment.

An even simpler way to think about it is that credits are sending money, while debits are requesting it.

Key terms associated with ACH payments

It’s handy to have a short glossary of terms to refer back to when sorting out ACH payments. Here are a few of the most common words and acronyms you’ll see, along with definitions. This will make it easier to understand the whole process.

• Routing number (ABA) - the 9-digit number that identifies a US bank. You’ll need this to make a payment.
• Account number - a 9-digit code that you use with the ABA to make payments.
• ODFI - short for Originating Depository Financial Institution, this is the sender’s bank.
• RDFI - the receiving bank (Receiving Depository Financial Institution).
• NACHA - The organisation that runs the ACH network and enforces its rules and standards.
• ACH debit - a payment ‘pulled’ from an account.
• ACH credit - a payment sent to an account
• Settlement - when the transfer of funds using the ACH network has officially ‘cleared’.

How do ACH payments work?

Now, with those terms in mind, let’s look at how ACH payments work, step-by-step².

1. First, the sender initiates the payment and selects from one of three payment windows: same day, next-day, or two-day.
2. The bank (ODFI) then sends the request into the ACH network, complete with details about the transfer (type, routing numbers, amount).
3. Transactions are grouped into batches ready for processing and sent to an ACH operator.
4. The ACH operator then forwards everything to the receiving bank.
5. The receiving bank (RDFI) processes the request
6. The final step: funds are deposited into the recipient’s account

ACH doesn’t process transactions one by one like other ‘instant’ payment systems. Instead, it bundles them together and processes them at set intervals during the day. The batching system keeps costs lower with the caveat of slightly longer settlement times.

As an Australian business, you’re not directly part of the ACH network by default, so you can’t just log into your local bank and send an ACH transfer. You need a provider that connects you to US banking ‘rails’ – the networks that move money from one bank to another.

In Australia, the Bulk Electronic Clearing System (BECS) is used for domestic direct debit and credit transactions.

How long do ACH payments take?

ACH payments take up to 3 working days to settle in a bank account, which is typically slower than the standard time frame for international wire transfers, such as SWIFT. This is because ACH payments are processed in batches based on payment windows selected by the person initiating the transfer.

How to make ACH payments in Australia

If you’re based in Australia, you won’t be able to initiate an ACH payment from a local transaction account with a bank like Westpac or CommBank. These banks typically send international payments via SWIFT. To use ACH, you’ll need access to a US-based account or USD account details, plus a provider that can connect you to the ACH network.

Once that’s sorted, the process is pretty straightforward, following the chain of events we covered earlier:

• Get your recipient’s US bank details - you’ll need their name, plus the account number and the bank’s routing number.
• Enter the payment through your provider - along with the amount and any reference info (like a note or email address).
• Your provider then submits the transfer to the ACH system - where it’s grouped with other payments and processed in batches.
• Funds are delivered to the recipient’s account - typically within 1-3 business days.

It’s not complicated, but you’ll need the right setup in place. That’s why many businesses turn to global payment platforms, which make the whole process much easier.

Making ACH payments with Wise Business

With a Wise Business account, you can get local account details for 8+ currencies, including the USD. It’s also easy to select ACH as the payment type when sending money. Here’s how it works:

Step 1. Set up a Wise Business account and log in, either online or via the app
Step 2. Get the recipient's local USD account details (including the routing number).
Step 3. Select ACH payment from the dropdown list of payment types, then enter the recipient's US bank account details.
Step 4. Send the payment via ACH.

As you can see, it’s a very simple process with Wise Business, and it means you pay US suppliers like a local business, even from Australia, with just one account.

There are a few ‘bonus’ features, too, that provide more value. You can use batch payments to pay multiple recipients in one go via ACH. Conversions also occur at the mid-market exchange rate with no hidden markups for currency conversions. And every time you make an ACH transfer, you’ll always see transparent pricing with itemised fees upfront.

How to receive ACH payments in Australia

You’ll need access to your US account details to receive ACH payments, otherwise it will usually be sent via wire instead.

To get set up, you’ll require:

• US bank details - so the sender can pay you through the ACH network
• A routing number (ABA) - this identifies the US bank that will handle the payment.
• A USD account to receive funds - this is where the money will land
• A way to manage incoming payments - ideally, you need a platform that’ll let you track payments and reconcile them with your accounts, as well as provide access to tools like invoicing.

Receiving ACH payments with Wise Business

Banking like a local with Wise also works for receiving payments. All you need are your US account details – this lets you receive ACH payments directly from US customers into your Wise Business account, even if your business is based in Australia.

Here’s how it works:

Step 1. Log in to your Wise Business account.
Step 2. Pay a one-time 65 AUD fee to unlock up to 24 local account details, including USD.
Step 3. Add USD to your main account by selecting ‘Add a currency' from the main dashboard (if you haven’t already).
Step 4. Select ‘Get account details’ to access your US routing number and account number. You might have to then run through a quick verification step.
Step 5. Copy and then share the details with your US customer so they can pay you via ACH.
Step 6. Receive payments via ACH directly into your Wise Business account.

From there, you have the flexibility of either holding the funds in USD or converting them to AUD at a time that suits you, rather than being locked into a bank’s exchange rate.

What are the costs associated with ACH payments?

Unlike card payments, ACH transfers go directly between bank accounts. That’s a big reason why they’re generally cheaper than alternatives like SWIFT, especially for larger or recurring payments. There are still several costs to consider when making and receiving ACH payments, though.

Direct ACH fees (US domestic)

ACH payments don’t cost a lot; they are often free or just a few cents. A study shared by Nacha put the median internal cost for ACH debits and credits at just $0.26–$0.50³. Some providers might also charge a very small percentage on top. However, because there aren’t any card networks, like Visa or Mastercard, the costs are lower.

Currency conversion

ACH payments are USD only, but sending from AUD or converting back to AUD will incur a currency conversion fee. With traditional banks, this is likely to include a foreign exchange (FX) markup. The typical range is 1–3% of the transfer amount, depending on the provider. So on larger payments, the conversion cost can be higher than the ACH transfer fee itself.

ACH payment vs wire transfer

To get a better idea of ACH payment costs, here’s how it compares to Wire transfers (like SWIFT).

Wire transfers work globally and are faster, but they are more expensive than the low-cost domestic payments available in the US through ACH.

Common challenges involved with ACH payments

ACH payments are quite low-cost and convenient, but you might run into a few challenges if you’re relying on them regularly.

• Slower settlement times - because payments are processed at intervals, the settlement times are generally longer than other payment types, like credit cards or PayPal.
• Not ideal for international business - ACH is a US system that only works within the US banking network, so it’s not suited to most cross-border transactions.
• Potential reversals - ACH payments can be returned or reversed. There are specific codes for this that help you to resolve issues. For example, an R01 code denotes ‘insufficient funds” to complete the transaction⁴.
• Currency conversion costs - ACH payments are US-only, but Australian businesses often need to convert AUD to USD (and vice versa). This is where hidden exchange rate markups can add up quickly.

Wise Business: Simplify global payments

Expanding into the US market usually means dealing with expensive SWIFT fees and inflated exchange rates from traditional Australian banks.

Wise Business helps solve this financial friction by providing local US account and routing numbers directly from your online dashboard.

Wise Business helps streamline overseas business payments without foreign transaction fees, saving up to 3x compared to other providers.

• Free to register — Send money to 140+ currencies with no hidden exchange rate markups
• Make up to 1,000 transfers at once with the Wise batch payments feature
• Fast, low-cost payouts to customers, freelancers, employees, investors, and suppliers globally
• Automate invoice payments, recurring transfers, and international payroll
• Fast and fully secure payments through Wise, even for large amounts

Tired of hidden fees and complex processes when making overseas payments?

Start sending with a Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

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ACH Payments FAQs

1. How can I initiate an ACH payment to a U.S. company?
You'll need a US bank account and routing number to make an ACH payment to a company in the United States. This is typically done through a payment provider, like Wise Business, that supports ACH transfers.

2. Is ACH payment safe for business transactions?
Yes, ACH payments are regulated by NACHA and are subject to very strict security and encryption standards for sensitive information, such as bank details. Nacha says it’s “continually advancing” its network with new capabilities to make sure all payments are “safe and efficient”⁵.

3. Is an ACH payment a direct deposit?
Sometimes, yes. A direct deposit is a type of ACH payment – specifically, an ACH credit sent to an individual from a business or government. These include things like payroll and interest payments.

4. Are ACH payments reversible?
ACH payments are usually only reversible when something has gone wrong: fraud, errors, insufficient funds, etc. A sender cannot stop an ACH payment manually after it’s been processed. But you might be able to request a reversal through your bank within a very limited timeframe.

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Sources:

1. Nacha - Payments network volume in 2025
2. Nacha - How ACH payments work
3. Nacha - ACH costs are a fraction of check costs for businesses
4. Stripe - Complete list of ACH rejection codes
5. Nacha - ACH payments fact sheet