Definition
An electronic bank-to-bank payment sent through the Automated Clearing House network, used for payroll, bill pay and transfers.
What it means
The Automated Clearing House (ACH) is the national network that moves electronic payments between U.S. banks and credit unions in batches. Direct deposit of pay, automatic bill payments, payments to the IRS from a bank account and many transfers between your own accounts are ACH transactions. The Federal Reserve runs one ACH operator, called FedACH, and a private operator runs the other. Standard ACH payments usually settle within one to two business days, and same-day ACH is available for many payments. ACH transfers are usually free or low cost for consumers. Under federal Regulation E, you have rights to dispute unauthorized electronic transfers from your account if you report them in time. ACH is mostly domestic; sending money abroad usually uses a wire or a remittance provider.
Example
Paying a $150 utility bill by ACH from checking usually costs nothing, while paying the same bill with a debit card through a third-party payment service might add a $2.95 convenience fee.
Illustrative numbers only. Your situation will differ.