An Automated Clearing House (ACH) debit is a form of electronic transaction in which funds are “pulled” from an account. In other words, it’s a financial transaction where money is withdrawn from a bank account.
The ACH network facilitates these transactions between banking institutions. This is the inverse of an ACH credit transaction where money is “pushed” into an account.
To process an ACH debit, the account holder must first authorize the transaction. This authorization can be given online or in person, depending on the situation. Once authorized, the payer’s financial institution receives an electronic request for the funds to be transferred to the payee’s financial institution. The payer’s account is then debited, and the funds are sent to the receiving bank to be credited to the payee’s account.
ACH debit transactions are used for a variety of purposes, including the following:
- payments to businesses
- automatic bill payments
- person-to-person money transfers
- charitable donations
This method of payment is generally considered to be secure, efficient, and cost-effective. However, as with any type of transaction, it’s important for account holders to monitor their accounts for unauthorized activity.