ACH withdrawal meaning
An ACH withdrawal is a payment that a company takes from your bank account electronically, through the ACH network. The company sends the payment instruction. Your bank takes the money from your account and passes it on.
It has several names. They all mean the same thing.
| Name | Who uses it |
|---|---|
| ACH withdrawal, ACH debit, ACH pmt | Banks, on statements and in online banking |
| Direct Payment | Nacha, the organization that writes the ACH rules |
| Automatic payment, autopay | Companies that bill you |
A company may only take an ACH withdrawal if you gave permission, called an authorization. For a recurring payment from a personal account, federal law says the permission must be in writing, or the electronic equivalent, and you must get a copy.
An ACH withdrawal can also be one you set up yourself, such as moving money into an investment account.
Common ACH withdrawals
Nacha lists these as typical ACH debits.
- monthly bills
- mortgage, car and other loan payments
- insurance, tax and homeowners association payments
- tuition
- donations to a charity
- moving money into an investment account
Rent, utility bills and membership fees are often collected the same way.
How to find out who took it
- Read the name on the line. Nacha says the name of the company or organization should be shown on your account statement. For a personal account, federal law requires the statement to show the amount, the date, the type of transfer and the name of the other party.
- Read the rest of the line. A company adds a short description of the payment, up to 10 characters. See ACH on a bank statement for common words.
- Ask the people who share the account. Nacha’s advice is to check whether someone else on the account authorized the payment.
- Check your own records. Look for a sign-up, a free trial that ended, or a yearly renewal. The name on the line can be cut short, because an ACH payment has room for only 16 characters of company name.
- Ask your bank. The payment carries the company’s name and a 10-character company ID. Ask your bank to read them to you.
Do not call Nacha. It does not process payments and has no access to information about individual payments.
Did you authorize it?
| Situation | What it is | What to do |
|---|---|---|
| You agreed to it, and the amount and date are right | A normal payment | Nothing. To end it, cancel with the company and tell your bank |
| You agreed to it, but the amount or the date is wrong | Not in line with your authorization | Tell your bank and the company |
| You cancelled, and the company took it anyway | Authorization revoked | Tell your bank |
| You never agreed to it | Unauthorized | Tell your bank as soon as you see it |
For a personal account, report a payment you did not authorize no later than 60 days after your bank sent the statement that first shows it. Report it sooner if you can. If the 60 days have passed, tell your bank anyway. See how to dispute an ACH payment.
A complaint about the goods or the service is different. If you agreed to the payment and are unhappy with what you received, deal with the company. The rules for unauthorized payments do not cover it.
What to do next
The steps, the deadlines and the sample letters are in a separate guide: how to stop an unauthorized ACH withdrawal. It covers three things.
- how to stop a payment before it is taken
- how to get money back after a payment you did not authorize
- what your bank must do, and how long it has
If you run a business, the time is much shorter. A business account is not covered by Regulation E. See ACH fraud prevention.
An ACH withdrawal is not a card payment
| ACH withdrawal | Debit card payment | |
|---|---|---|
| Uses | Routing number and account number | Card number |
| Travels through | The ACH Network | A card network |
| Started by | The company, from your authorization | You, at a terminal or checkout |
Both take money from the same account. Regulation E lists both as kinds of electronic fund transfer, so a personal account has error and dispute rights for either one.
Common mistakes
- Waiting to see if it happens again. The time to report is limited. Tell your bank when you first see a payment you do not know.
- Looking only at the short name. Ask your bank for the full company name and the company ID.
- Only telling the company. Tell your bank as well. Your bank can block future payments from that company.
- Closing the account to stop payments. A stop payment or a cancelled authorization is simpler. You may still owe the money.