ACH payment processing allows businesses to send and receive money electronically between bank accounts. Businesses commonly use it for invoice payments, payroll, subscriptions, and other transactions where paper checks or credit cards aren’t the best fit.
The method isn’t just for banks and large corporations. According to the nonprofit governing body Nacha, the ACH network processed 35.2 billion payments in 2025—including 8.1 billion payments between businesses. For business owners, ACH payments can be an attractive option for wholesale orders and other high-value transactions where credit card fees can get expensive.
Here’s a look at how ACH payment processing works, when businesses typically use it, and how Shopify store owners can use ACH payments to accept money from customers and pay vendors.
What is ACH payment processing?
Automated Clearing House (ACH) payment processing is a way for business owners to accept payments from customers and make payments to other businesses. The ACH network moves these payments electronically between any bank or credit union account in the United States.
Unlike wire transfers, which are typically used for urgent or international payments, ACH transfers are designed for everyday electronic payments because the network can process large volumes of routine transactions efficiently and at a relatively low cost.
The ACH network works quickly, with the typical ACH payment processing time at one banking day or less. That’s generally faster than mailing and clearing a paper check, though not as immediate as a wire transfer. Direct deposit is also an ACH payment, making it a common option for payroll. ACH payment processing fees are typically lower than those for other payment methods: The median cost of an ACH payment runs 26¢ to 50¢, versus 1.7% to 2.5% of the transaction on credit card payments, up to $65 on a wire transfer, and $1 to $4 for a paper check.
ACH payments suit transactions where credit card processing fees eat into a business’s margins. They’re commonly used for wholesale orders, invoice payments, recurring payments, high-value transactions, and direct deposit payroll, because they typically cost less than wire transfers and many card payments.
| Payment method | How it works | Typical speed | Typical cost | Best for |
| ACH payment | Funds move electronically between US bank or credit union accounts through the Automated Clearing House (ACH) network | Usually 1 business day or less | About 26¢–50¢ per payment (median) | Invoice payments, recurring payments, B2B transactions, and consumer bank transfers |
| Direct deposit | A type of ACH payment that electronically deposits funds directly into a recipient’s bank account | Usually 1 business day or less | Typically low or no cost | Paying employees, contractors, government benefits |
| Wire transfer | Funds are sent directly from one financial institution to another without using the ACH network | Often same day (sometimes within hours for domestic transfers) | Up to about $65 per transfer, depending on the provider | Urgent, high-value, or international payments |
| Paper check | The payer writes and mails or hands over a physical check, which the recipient deposits and the bank processes | Several days (mailing, deposit, and clearing time) | About $1–$4 per check | Businesses or customers who prefer traditional payment methods |
ACH debit vs. ACH credit
Businesses can make two types of ACH transactions: ACH debits and ACH credits. An ACH debit “pulls” money from a customer’s bank account into your business account. Before initiating an ACH debit, you need authorization from the customer. An ACH credit “pushes” funds from your account into another, such as a vendor’s bank account.
How ACH payment processing for small business works
- You initiate the payment
- The payment is batched and submitted
- The ACH network processes the transaction
- Funds are transferred and settled
A business processes an ACH payment by collecting the customer’s bank account information, requesting authorization to initiate the transaction, and routing the payment through a bank or payment processor. ACH processing works the other direction, too: a business can use it to pay a vendor or another entity.
Here’s a how ACH payment processing for small businesses works in the context of collecting a bill payment:
1. You initiate the payment
The customer provides their banking information and authorizes you to withdraw funds from their bank account. When a payment is due, you submit an ACH entry to your bank. You are acting as the “originator.”
2. The payment is batched and submitted
Your bank will group its ACH transactions into batches rather than processing each individually. The bank sends a batch to the ACH operator, such as the Federal Reserve or The Clearing House.
3. The ACH network processes the transaction
The ACH operator reviews the batch and routes the payment request to your customer’s bank. The customer’s bank verifies the account is valid and sufficient funds are available.
ACH transactions are batch-processed multiple times a day. According to Nacha, about 80% of ACH payments settle within one banking day. The rest can take up to two banking days. Processing times can vary depending on when the payment is submitted, the banks involved, and whether the transaction requires additional verification.
Standard ACH payments settle according to the network’s schedule. To guarantee immediate processing, you can send same-day ACH payments for an additional fee. These are designated as "same-day ACH" by the sender. They must meet specific submission deadlines, transaction limits, and formatting requirements. In return, the ACH network guarantees settlement that day.
4. Funds are transferred and settled
Once approved, funds are withdrawn from the customer’s account and deposited into your business account.
Using ACH Direct Debit on Shopify
Shopify store owners can accept ACH payments for B2B orders through Shopify Payments, the platform’s built-in payment processing solution. Eligible US stores can integrate ACH payments by turning on ACH Direct Debit, which lets business customers pay directly from their bank accounts at checkout.
US-based Shopify stores can activate the ACH Direct Debit payment method if they:
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Accept USD currency in a US-based bank account
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Have fulfilled at least 100 orders
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Have completed the trial period
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Are on an active Shopify subscription plan
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Have completed the identity verification process
This payment method can be particularly useful for wholesale orders and large invoices, where credit card processing fees can quickly add up.
For example, let’s say you run a wholesale clothing business on Shopify. A boutique places a $7,500 inventory order through your B2B storefront. The buyer chooses ACH Direct Debit at checkout and authorizes payment from their business bank account. Credit card transactions at this amount may cost a few hundred dollars, but ACH payment processing fees are often much lower.
The payment can take up to four business days to process. After the payment settles, the funds are paid out to you according to your set payout schedule. Refunds are available within 180 days of the original charge.
Paying vendors with ACH payment processing on Shopify
ACH payment processing isn’t just for collecting money from customers. Shopify store owners can also use Shopify Bill Pay to send ACH payments to vendors and suppliers. Powered by bill payments platform Melio, Shopify Bill Pay is a centralized bill management system that lets you choose the payment method that makes the most sense for each transaction.
For example, if you’re a furniture retailer who sources inventory from multiple manufacturers, you can set up Shopify Bill Pay to send payments directly from your bank account to each supplier through the ACH network.
Store owners with a Shopify Balance account can also make ACH vendor payments without paying transfer fees, since paying from these methods is free. To get started, open Shopify Bill Pay in your Shopify admin dashboard, create your unique bill pay email address, and have vendors send invoices there to automatically sync bills for review and payment.
ACH payment processing for a small business FAQ
Can small businesses accept ACH payments?
Yes, small businesses can accept ACH payments through their bank or an ACH provider that supports these transactions. Shopify store owners, for instance, can set up ACH Direct Debit to process ACH payments for business orders. ACH payments are commonly accepted for invoices, subscriptions, and larger purchases.
How much does it cost a bank to process an ACH?
Financial institutions often spend less than 50¢ to process ACH transactions. But ACH payment processors may charge merchants a flat fee or percentage to cover additional expenses such as fraud prevention, compliance, and payment processing services. Even with those added costs, ACH fees are generally lower than credit card payments, which is why ACH processing can be a cost-effective choice.
What is the cheapest payment processor for a small business?
ACH payments can often be the cheapest payment processing method for a small business. They come with lower transaction fees compared to wire transfers, paper checks, and credit card transactions, making them an attractive option for invoices and large purchases. When comparing ACH payment processing providers, look for a transparent fee structure and low fees.
