ACH Payments help with everything from direct deposit of your paycheck to monthly bill payments from your bank account. These payments happen thanks to the Automated Clearing House (ACH), a network that ensures the smooth movement of money from one entity to another.
Transactions usually take a few days to process, but payments are typically easy to manage. While the majority of transfers are problem-free, mistakes happen occasionally. In those cases, it helps to know if and when you can reverse, stop, or cancel a payment.
How Do You Reverse an ACH Payment?
National Automated Clearing House Association (NACHA) rules cover if and when a simple reversal is allowed. Your bank can only reverse a payment from your account for one of the following reasons:
- The wrong amount was transferred (for example, $200 instead of $150).
- A transfer had the wrong account number, meaning the sender or recipient was not the right account.
- If a transfer goes through more than once, the duplicates would be reversed.
In the situations above, the bank must reverse the charges within five days and notify the affected bank account owners. Those three situations for reversals are fairly limited, but there are other changes you may need to make to an ACH payment.
Reversals must be originated by the person who initiated the transaction, not the receiver.
How Do You Stop an ACH Payment?
If you’ve authorized ACH payments that you want to stop, you have a legal right to revoke your authorization. To do so, call or write the biller to request that they stop taking automatic payments. Let your bank or credit union know, too, by writing a letter.
If a company continues to charge your bank account, it may be possible to stop payment like you would with a check. To prevent your bank from allowing funds to leave your account, contact the bank at least three business days before the payment date.
You can contact your bank by phone or in person, but make sure you submit your request in writing, too, within 14 days.
If you decide to stop an ACH payment, expect to pay a modest fee, and know that a stop-payment order with your bank doesn't cancel your contract with the company. You still need to contact the biller, cancel your contract, and tell them to stop taking payments. Check your account to make sure they're following your wishes, and dispute any transfers you did not authorize with your bank.
Adjusting Online Bill Payments
If you pay bills by ACH, there may be times when you want to adjust, change, or delay a payment that would otherwise go through on its own. In those cases, contact whoever creates the payment:
- Your biller (such as a utility company), if the funds are automatically pulled from your account each month
- Your bank, if you set up the payment through your bank’s online bill payment system to send funds from your account
Be sure to request any changes as soon as possible. If you’re not confident that your biller will honor your request (as is the case with some shady billers), you can also ask your bank to help.
Changing Direct Deposit
If you receive a direct deposit payment each month and need to switch the account it goes into, contact the company that sends the money as soon as possible. Give them your new bank account details, including the bank routing number, and ask them to delete your old account information.
If You Discover Fraud and Errors
You are often protected from errors and fraud under federal law. But you might need to act quickly for full protection. Notify your bank as soon as you discover a problem—within two days is ideal. If you wait more than 60 days after your bank creates a statement, you might be responsible for any losses. Instead of having the payment reversed, you’ll have to get those funds back some other way.
Businesses need to be especially careful about ACH transfers out of accounts. That’s because federal consumer protection laws don’t cover business accounts. To prevent problems, ask your bank about solutions that can reduce the chances of theft (such as ACH Block and ACH Filter services).
ACH Payments vs. Wire Transfers
Wire transfers are different from ACH payments, and they generally cannot be reversed. Wire transfers happen more or less immediately, with the funds leaving your account and arriving at their destination on the same day. In this case, funds are often available for use immediately, which can make it even harder to get money back.
Frequently Asked Questions (FAQs)
How long does an ACH payment take?
ACH payments can process on the same day or in one to two business days, depending on the option the payer chooses.
What information is needed to make an ACH payment?
The only information you need to make an ACH payment is your bank routing and account number. If you're setting up automatic payments with a service provider, you might need to provide a voided check to verify this information.