What Is FedACH?

FedACH is the Federal Reserve Banks' automated clearing house service. It moves money electronically between US banks in batches, handling things like payroll direct deposits, vendor payments, and bill collections. It is one of two national ACH operators in the US, alongside the Electronic Payments Network (EPN), a private operator owned by The Clearing House.

The ACH Network processed 35.2 billion payments worth $93 trillion (USD) in 2025, up 4.9% from the prior year. For fintech companies building payment infrastructure, understanding how FedACH works and where it falls short is key to choosing the right payment rails.

How does FedACH process payments?

FedACH uses batch processing rather than real-time settlement. Instead of sending each payment the moment it's created, FedACH collects payment instructions into files, sorts them, and sends them to receiving banks at set times throughout the day.

Here's how a typical FedACH payment flows:

• The sender's bank (called the ODFI) submits a batch file of payment entries to FedACH
• FedACH sorts and routes each entry to the recipient's bank (called the RDFI)
• The RDFI credits or debits the recipient's account

FedACH handles both credit transfers (pushing funds to someone, like payroll) and debit transfers (pulling funds from someone, like bill payments).

What are FedACH processing windows and settlement times?

FedACH runs multiple processing windows each business day: three same-day windows and six future-dated windows. Each window has:

• A transmission deadline (when FedACH must receive files)
• A target distribution time (when receiving banks get notified)
• A settlement time (when funds actually move between Federal Reserve accounts)

Same Day ACH has grown fast since launching in 2016. In 2024, same-day volume exceeded 1.2 billion payments worth $3.2 trillion (USD), a 45.3% jump over 2023. The per-transaction limit is $1 million (USD).

For standard (non-same-day) processing, settlement typically takes T+0 to T+1, depending on when files are submitted. No transactions settle on weekends or federal holidays.

How does FedACH compare to Fedwire and FedNow?

Each US payment rail is built for different use cases. Here's how FedACH stacks up:

FedACH vs. Fedwire. Fedwire is a real-time system for high-value, urgent wire transfers. FedACH batches millions of smaller payments together; Fedwire sends each one individually and instantly. FedACH costs a fraction of a cent per transaction, while Fedwire fees make it impractical for high-volume use cases like payroll.

FedACH vs. FedNow. FedNow, launched in July 2023, is the Federal Reserve's instant payment service. It works 24/7/365, including weekends and holidays. FedNow targets the same everyday payment space as FedACH, but settles instantly instead of in batches. Adoption is still early, but FedNow will likely take over payment flows where speed matters as more banks join.

FedACH vs. EPN. Both follow Nacha operating rules and handle the same transaction types. The difference is who runs them: FedACH is operated by the Federal Reserve, EPN by The Clearing House. Banks can use either or both.

What types of transactions does FedACH handle?

ACH transactions are labeled with Standard Entry Class (SEC) codes that show how the payment was authorized:

• PPD (Prearranged Payment and Deposit): recurring consumer payments like payroll and mortgages
• CCD (Corporate Credit or Debit): business-to-business payments
• WEB (Internet-Initiated Entry): consumer payments authorized online
• TEL (Telephone-Initiated Entry): consumer payments authorized by phone
• IAT (International ACH Transaction): cross-border payments sent through FedGlobal ACH

What is FedGlobal ACH?

FedGlobal ACH extends ACH to international payments, letting US banks send cross-border transactions using the same batch process they use domestically.

That said, it has clear limits for fintechs operating at scale:

• Coverage only reaches specific country corridors
• Settlement takes T+1 to T+3
• FX rates go through correspondent banks, not direct market access

For fintechs that need broader reach, faster settlement, or better FX rates, stablecoin rails and direct local payment networks skip the correspondent banking layer entirely.

What are FedACH's limitations for fintechs?

FedACH works well for domestic US payments, but fintech companies building cross-border products run into several constraints:

• Settlement delays. Even Same Day ACH only runs during business hours on banking days. Payments made on weekends or holidays don't settle until the next business day
• Narrow cross-border reach. FedGlobal ACH covers limited countries at T+1 to T+3 speeds. A payment to Brazil takes days through FedGlobal ACH, while Pix settles instantly
• Unpredictable FX costs. Cross-border payments through correspondent banks pile up spreads and middleman fees that are hard to forecast. Mid-market rates are rarely available
• Bank access required. Only banks can connect directly to FedACH. Fintechs need a sponsor bank or a processor with ODFI capabilities, which adds cost and complexity

Build cross-border payments beyond FedACH

FedACH is foundational for domestic US payments. For fintechs moving money across borders, combining stablecoin settlement with direct local payment networks delivers faster settlement, broader coverage, and clearer pricing than routing through ACH and correspondent banking infrastructure.

Due's payment API connects fintechs to local rails across 80+ countries through a single integration, with instant settlement in many corridors where FedGlobal ACH takes days.