ACH (Automated Clearing House)
The electronic network U.S. banks use to move payroll funds between accounts.
The Automated Clearing House (ACH) is the U.S. electronic interbank network used to transfer payroll funds, government benefits, vendor payments, and consumer bill payments. ACH is governed by Nacha (National Automated Clearing House Association), processes settlement in batches multiple times per banking day, and is the default mechanism behind every direct-deposit paycheck issued by U.S. employers.
Standard ACH credits — the kind your payroll provider initiates each pay date — settle 1–2 banking days after the originating bank submits the file to the network. Same-day ACH, available since 2016, settles the same banking day if the file is submitted before the daily cutoff (typically 4:45 PM Eastern for credit transfers, with later windows added in 2021). Most small-business payroll software defaults to standard ACH because there's no per-transaction fee; same-day ACH typically carries a small fee per transaction.
For employers, the practical implications are timing-driven. To pay employees on Friday via standard ACH, the payroll file usually has to be submitted by Wednesday or Thursday morning. Federal holidays compress that window — a Monday holiday eliminates a banking day, which means a Friday pay date may need a Tuesday submission instead of Wednesday. The schedules on this site already shift Friday pay dates backward when a federal holiday creates this kind of conflict.
ACH reversals (e.g., for a payroll overpayment) are governed by Nacha rule §3.7 and must be initiated within five banking days of the original transfer. The receiving bank's cooperation is required — if the funds have already been withdrawn, the reversal will fail and recovery becomes a private collection matter. Avoid the problem entirely by reviewing payroll runs carefully before submission.