ACH Credit vs ACH Debit
\When you’re processing an ACH transaction, you’re sending or receiving electronic payment data across the ACH Network. When one of these transfers occurs, it’s known as an ACH Credit or ACH Debit.
As ACH industry veterans, we help thousands of businesses connect to the fast-growing ACH Network every day. Whether you’re processing payroll or setting up recurring billing, this post will help you better understand the ins-and-outs of ACH Credit vs ACH Debit during ACH transfers.
What is an ACH Debit and how does it work?
ACH Debits are the most common ACH transaction type. They’re used by merchants to pull money directly from customers’ accounts. An ACH Debit starts when a customer provides routing and account information to a merchant and authorizes them to make a transaction. (For a deeper dive into this process, check out our post ACH 101: Understanding the Automated Clearing House.)
To better understand how ACH Debit processing works, let’s examine a real-world example from a consumer’s perspective. Imagine that you’re setting up your monthly utilities payments (a frequent use case for this transaction type). You’d provide your bank account, routing number and authorization to your utilities service provider to initiate an ACH Debit, and they’d then be able to withdraw funds from your account each month.
What is an ACH Credit and how does it work?
ACH Credits happen when money gets deposited into a Receiver’s account rather than being deducted like an ACH Debit. To provide another real-world example from a consumer’s perspective, imagine that you’re receiving funds that you enrolled in through your employer’s direct deposit. You’d provide your name, bank account number, transaction amount, etc., and your employer could then transfer funds to your account on a recurring basis.
It’s important for merchants to note that ACH Credit transactions must be pre-funded. While not all merchants will utilize ACH Credits, the ones that do, understand that they must maintain a Credit Reserve Balance in their merchant account to fund their submitted Credit transactions.
Processing ACH Credits & ACH Debits with Actum
Actum offers flexible processing methods which gives merchants a choice to submit ACH Debit and Credit transactions one of three ways:
- Online using our web-based portal
- Through our robust and easy-to-integrate API
- Batch upload via shared SSH File Transfer Protocol (SFTP)
With Actum, you can submit your ACH Credit and ACH Debit submissions for processing around the clock. Plus, we support Same Day ACH Credits and Debits, which can help you speed up your accounts receivable. In addition, for software companies, we support a Credit Reserve API that enables you to display an up-to-date balance as a reference point for your clients.
For more information about ACH Debit and Credit processing with Actum, we invite you to Contact Us.