ACH payment

What is an ACH payment?

An ACH payment is an electronic transfer of money directly between two bank accounts, processed through the Automated Clearing House network, a US-based payment system that connects financial institutions without involving card networks, checks, or cash. It is commonly used for direct deposits, bill payments, and subscription billing.

ACH is a US-only payment method. Merchants outside the United States or selling to non-US customers will need to use alternative payment methods for those transactions.

There are two types of ACH transfers worth knowing:

• ACH debit pulls money from the customer’s bank account when payment is due. This is the type used for subscription billing.
• ACH credit pushes money from one account to another. This is typically used for payroll and direct deposits.

How does an ACH payment work?

The process is straightforward for subscription merchants:

• A customer authorises a payment, for example by signing up for a subscription and agreeing to recurring bank debits.
• The merchant submits a payment request to their bank.
• The request joins a batch of transactions sent through the ACH network.
• Funds move from the customer’s bank account to the merchant’s account, typically within one to three business days.

ACH transfers move directly between bank accounts and do not pass through a payment gateway the way card transactions do. This is what makes them cheaper to run at scale.

Why are ACH payments popular for subscriptions?

For subscription merchants, ACH offers two clear advantages over card payments.

First, transaction fees are significantly lower. Card payments typically charge a percentage of each transaction. ACH fees are usually a flat rate per transfer, which adds up to meaningful savings when you are processing hundreds of recurring charges every month.

Second, bank accounts do not expire. Unlike card payments, bank accounts do not expire, which directly cuts the involuntary churn that comes from failed charges on outdated card details. A subscriber whose card expires will lose access to their subscription. A subscriber paying via ACH will not.

Example of an ACH payment in ecommerce

A customer signs up for a monthly subscription box and chooses to pay by bank transfer instead of card. Each month, the merchant pulls the subscription fee directly from the customer’s bank account using ACH. No card details to expire, no card network fees eating into margins. That is an ACH payment working exactly as intended for subscription billing.

Driftcharge Tip

If your store handles recurring payments, offering ACH alongside card payments gives subscribers a more stable billing option and reduces the risk of failed charges. It is particularly worth considering for higher-value subscriptions where card fees compound quickly and payment reliability matters most.

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.