ACH stands for Automated Clearing House, a U.S. financial network used for electronic payments and money transfers. Also known as “direct payments,” ACH payments are a way to transfer money from one bank account to another without using paper checks, credit card networks, wire transfers, or cash.

An ACH transaction basically consists of a data file containing information about the desired payment. Processing a transaction consists of sending that file to the originator’s bank, then to the clearing house, and finally to the recipient’s bank, where the funds are transferred to the receiving account.

ACH payments generally take a maximum of three days to settle. Obviously, they are not instant because they need to go through the ACH network. ACH operators send payments in batches and only three batches per business day.

A “direct deposit” is a type of payment made via the ACH network. It’s an informal name for common ACH deposits where individuals receive payments directly into their bank accounts. The ACH-based payouts popularly referred to as direct deposits include: Salary and wages.

There’s usually no fee to receive them. ACH debit transfer cost: These transfers, which include payroll direct deposits and most bill payments, are typically free. If you need expedited bill payments, there can be fees.