ACH payment

What is an ACH payment?

The Automated Clearing House (ACH) network, a U.S. based system that enables individuals and businesses to transfer money electronically between banks without the use of checks, cash, or credit card networks, is the basis for an ACH payment. Direct deposits, bill payments, and even e-commerce subscriptions are common uses for it.

How does an ACH payment work?

This is a brief explanation of how ACH payments work:

• A payment is authorized by a customer. For example, signing up for a subscription.
• The company sends a request for payment to its bank.
• The request is processed in batches after being transmitted via the ACH network
• Typically, within one to three business days, money is transferred from the customer’s account to the merchant’s account.

Why are ACH payments popular for subscriptions?

Because ACH offers fewer fees than credit card transactions and lowers the probability of payment failures due to card cancellation or expiration, it is particularly helpful for recurring billing, such as subscription services.

Example of an ACH payment in ecommerce

Consider a consumer who decides to pay by bank transfer when they sign up for a monthly subscription box. The subscription charge is taken out of the customer’s bank account by the merchant using ACH rather than billing their credit card. That is an example of an ACH payment.

Driftcharge Tip

Offering ACH as a payment option for subscriptions can reduce churn caused by card failures and save on transaction fees. If you are handling large recurring payments, it’s worth considering ACH alongside credit card payments.

Ganesh Pawar

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Ganesh Pawar is the founder of Driftcharge, a subscription management app designed to help Shopify merchants streamline and scale their subscription businesses. With a deep focus on solving real-world pain points—like legacy account page support, flexible subscription options, and advanced analytics—Ganesh is passionate about building tools that drive growth and retention.