Automated Clearing House (ACH) payments are a form of electronic funds transfer used in the United States. The National Automated Clearing House Association (Nacha) manages these transactions and sets their rules and standards. ACH payments typically take one to two business days to process, though same-day ACH transfers are becoming more widely available. Unlike wire transfers, which are processed in real time, ACH transactions are processed in batches at specific intervals.

The ACH network is based and operates in the US, but ACH payments can be sent to other countries as well, including Canada. The trade relationship between the two countries is well established: US goods and services trade with Canada totaled an estimated $908.9 billion in 2022, creating high demand for convenient payment methods.

This guide will cover how ACH payments are used and how to send them from the US to Canada. Here’s what you need to know.

What’s in this article?

• What are ACH payments used for?
  
• Can you send ACH payments from the US to Canada?
  
• How to send ACH payments from the US to Canada
  
• Alternatives for transferring funds between the US and Canada
  

What are ACH payments used for?

ACH payments are a popular way for businesses, government agencies, and individuals to electronically transfer funds. They’re typically less expensive than wire transfers or credit card payments, making them a natural choice for recurring payments or large-scale transactions. Here’s how they’re used:

• Direct deposits: Employers use ACH payments to deposit employee salaries and wages directly into their bank accounts.

• Government payments: ACH payments are also used for government agency payments such as tax refunds and government benefit disbursement (e.g., Social Security, Medicare, unemployment).

• Health care payments: The health care sector uses ACH for processing insurance claims, paying providers, and collecting payments from patients or insurers.

• Bill payments: ACH payments are frequently used to process recurring bill payments for utility bills, mortgage or rent payments, insurance premiums, and other monthly expenses. These payments are often set up for automatic withdrawal from a bank account.

• Business-to-business (B2B) transactions: Companies often use ACH when making payments to vendors or other businesses. It’s a lower-cost alternative to checks or wire transfers.

• Online transactions: Ecommerce platforms and other online services use ACH to process payments from customers. This can include one-time payments or subscription-based models.

• Interbank transactions: Banks and credit unions use ACH for interbank transactions and other financial activities such as loan disbursements. Customers often use ACH for automatic loan repayments as well.

• Tax payments: Individuals and businesses can use ACH to electronically pay federal or state taxes. Estimated tax payments or business tax filings are commonly paid using ACH.

• Charitable donations: Nonprofit organizations and charities use ACH for recurring donations from supporters.

• Educational payments: Schools, colleges, and universities use ACH for tuition payments, financial aid disbursements, and other financial transactions.

Can you send ACH payments from the US to Canada?

Yes, you can send ACH payments from the US to Canada. This process is known as an International ACH Transfer. International ACH Transfers usually incur fees, which can vary between providers, and they might take longer to process than domestic ones—typically a few business days.

When sending an ACH payment from the US to Canada, funds are converted from US dollars to Canadian dollars, and the exchange rate offered by your bank or transfer service will impact the final amount received. Not all banks facilitate International ACH Transfers, and some banks may have limits on the amount you can send internationally via ACH.

How to send ACH payments from the US to Canada

First, you’ll need to find a bank or a specialized money transfer service (such as Wise or OFX) that offers International ACH Transfers and assess the associated fees. Once you’ve found the bank or service, you’ll need the following information about your Canadian recipient to initiate the payment:

• Full name

• Canadian bank account number

• 3-digit bank institution number

• 5-digit bank transit number

• Bank branch address

• A SWIFT/BIC code (if there’s an intermediary bank involved)

Alternatives for transferring funds between the US and Canada

There are other common methods to transfer money internationally, including between the US and Canada.

• Wire transfers: Wire transfers are a common method for international transactions. They are usually faster than ACH payments but come with higher fees.

• International money transfer services: Companies such as Western Union, MoneyGram, PayPal, and others specialize in international money transfers. These services are often more flexible and come with more competitive fees compared to wire transfers.

• Society for Worldwide Interbank Financial Telecommunication (SWIFT): This is a global network used by banks and financial institutions for international money transfers. It facilitates secure and reliable international transactions.