The ACH system then handles transferring your money for the bill. You set up the electronic transfer of payments between your bank and the bank of the company you need to pay. Paying your bills online is an example of an ACH payment. How long direct deposit takes depends on a few factors. In this case, your employer would initiate the transaction with their bank, which the clearinghouse would process, before finally sending the money to your account. The process works in reverse when you receive money, like with a direct deposit. The ACH clearinghouse then contacts the bank of your utility company to give notice of the transaction and your Automated Clearing House payment. Your bank then submits your ACH transaction to a clearinghouse, a financial institution that processes these transactions. You’d enter the utility company’s banking information and how much you want to pay. First, you submit a request to your bank to electronically transfer money to your utility company. The transaction is processed through the ACH network instead a card network like Visa® or MasterCard.įor example, say you want to use ACH to pay your electric bill. You can use the ACH system to make a direct payment, which is when you send money to another person or company, or to receive a direct deposit, where you get money from someone, like your employer.
