The American Clearing House (ACH) network allows both individuals and companies to send money electronically between two institutions. These kinds of transfers can be automated or performed manually. As long as you reach the payment in time, you may also be able to cancel ACH transfers. The ACH is connected to every bank in America and transfers money in a secure process that can take a few business days.
What is an ACH Transfer?
The National Automated Clearing House Association (NACHA) governs these kinds of electronic payments, which are made to and from checking and savings accounts that belong to individuals and corporations. Although they are similar to wire transfers, a wire transfer happens instead near instantaneously; furthermore, the fee for a wire transfer can be up to $60, depending on the bank. ACH payments, however, are usually free to use at a standard banking institution.
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The best example of an ACH transfer is direct deposit, which occurs when a company transfers your paycheck into a checking or savings account from their own payroll department. This is more convenient for both the company and the employee; companies previously issued physical paychecks that each individual had to take to their own bank to deposit. Another example of an ACH transfer is recurring payments, such as a mortgage payment or phone payment, which individuals may set up so that money is automatically withdrawn from their accounts to make sure payments happen on time.
How to Cancel ACH Transfers
Since ACH transfers don't happen immediately, as long as you catch the transfer before it has been processed, you should be able to cancel ACH transfers. Some ACH transactions can be canceled directly via your online bank; some banks, however, may require you to call them or submit a form to cancel the payment. If it is a one-time payment and hasn't been debited from your account, you should be able to stop it without difficulty.
According to the Consumer Financial Protection Bureau, recurring payments may be canceled but should be stopped at least three days before the payment is set to transfer to give ACH time to process the request. This process often requires direct phone calls and written documents. First, you'll need to contact the company either giving or receiving the ACH payment and tell them you are revoking permission for them to access your account; next, contact the bank associated with the payment and inform them that you have revoked authorization for this company. This may involve canceling a service you're currently paying for during the process.
If you're in the middle of this process and need to stop a payment, contact the bank directly; you can submit a stop payment order, which will keep the bank from processing the automated transfer until you've formally canceled the recurring transaction. There may be a fee for a stop order from the bank. If you've followed this process and an ACH transfer is still made, you have the right to dispute this transfer and get your money back.
Reversing an ACH Transfer
If a transfer has gone through incorrectly, you can contact the bank and have them reverse the payment. According to The Balance, payments may be reversed for three primary reasons: the wrong dollar amount was transferred, an incorrect account number was used or the transaction was duplicated. If the bank makes any of these errors, they will contact the account owner and disclose that they have reversed the payment.