Sending ACH Payments with Sila

ACH payments are bank-to-bank electronic payments that speed up money transfers in the United States. And by allowing ACH processing through secure solutions like Sila, you can move money faster and with more flexibly than ever before. 

With the Sila development SDKs, you can create a versatile payment platform that seamlessly transfers payment through the ACH payment network. 

If you’re curious about what we have to offer here at Sila, then we’re here to help.

How sending ACH payments works

ACH payments, otherwise known as Automated Clearing House payments, are payments that are sent through an automated electronic payment system in the United States known as the ACH Network. 

This network is facilitated by banks, credit unions, and other financial institutions. Payments are sent by approved financial institutions through the Clearing House and the Federal Reserve so that electronic payment processing is automated and secure.

While the term ‘ACH’ might seem foreign, most people in the U.S. interact with it on a regular basis in the form of a direct deposit or bill payment through online banking. 

The ACH payment process looks like this:

  • Someone makes a request to send an ACH transaction. They are now known as the ACH Originator and their financial institution the Originating Depository Financial Institution (ODFI).
  • The ODFI will make sure all fields are accurately filled in and then send the request to the Clearing House in a batch. ACH payments can be sent as a same-day ACH payment. Otherwise, it will be processed within four business days.
  • Once the account verification is complete and the payment is confirmed to be in the account, the Clearing House will pass it along to the Federal Reserve and then the receiver’s bank (the Receiving Depository Financial Institution; RDFI). 
  • RDFIs are recommended to wait 48 hours until clearing the payment to the recipient as the Clearing House might send back return codes. However, some RDFIs may process payments faster with trusted clients.  

ACH payments need the following to be sent:

  • Name of the sender (otherwise known as the Originator) and recipient
  • Bank name of the Originator and recipient
  • Bank account number
  • Bank ABA or routing number
  • Bank transit number (sometimes)
  • Amount, date, and frequency of the ACH transfer

ACH payments can be set up as automatic payments (such as an EFT with a business), recurring payments (for a recurring ACH deposit to occur), or a one time ACH payment. ACH transfers can be facilitated through a bank, payment gateway, or third-party payment processor.  

Benefits of sending ACH payments through Sila

ACH payment processing is a reliable and sure-fire way of sending cash electronically. The Sila ACH API can be built into smart financial technology that processes ACH payments and other financial transactions.

Sila puts financial technology in the hands of developers. With Sila’s SDK, developers can build the next fintech startup, through a fully secure and U.S. regulated banking API. This app uses four separate secure partners in order to provide secure banking and payments via Infrastructure-as-a-Service. 

Sila transfers any currency into the Sila token, a form of Ethereum cryptocurrency, which can then be transferred to another Sila user. With the ability to transfer any currency into the U.S. dollar at an affordable price and reasonable rate, Sila helps move business faster and keeps everyone connected to U.S. markets.  

This means that you can send your money in one currency and deposit in another with a very affordable fee and the security of crypto and ACH transfers backing you. This makes money transfers extremely secure, due to the security of the cryptocurrency. It also allows for international payments to more easily and affordably be converted into the U.S. dollar. 

ACH processing times

While standard ACH payments might take up to four business days, same-day ACH payments might process within the same day. 

ACH payments might take longer than a credit card or wire transfer, but these forms of payment aren’t cash-in-hand. Instead, ACH payments allow for the transfer of pure-cash funds without the hassle of wire transfers or paper checks.

Standard ACH Transfer Timelines

A standard ACH debit will take about 3-4 business days in order for the transfer to be completed. 

Here is a Sila example:

  • On Monday: A user requests an ACH debit. 
  • Tuesday: Funds leave the other bank on Tuesday morning. 
  • Wednesday: The RDFI has 48 hours—until Thursday morning—to report a return code. This gives Sila enough time to wait for return codes and then process the ACH payment. 
  • By Thursday: The funds are settled by 4 PM and Sila tokens are issued at that time. 

Same Day ACH Transactions

In 2016, Nacha rolled out same day ACH processing. This not only improved the quality of the ACH Network, but it also reduced the incidence of returned entries and lowered the associated financial costs of the ACH Network. 

ODFIs will be able to submit same day ACH payments through two clearing windows:

  • 10:30 AM ET, with settlement occurring at 1 PM
  • 2:45 PM ET, with settlement occurring at 5 PM

Virtually all ACH transactions (99% of the current ACH volume), including both ACH credit and ACH debit transactions, are eligible for this type of processing. International transactions (IATs) and transactions above $25,000 are not eligible.

Why you should use Sila’s ACH API for your ACH payments

An ACH payment is a fast way to send cash electronically to another person or financial institution. For everyday use, ACH payment processing can provide many benefits, including providing a faster and easier way to send money for business transactions. 

Sila’s secure APIs can create the next financial innovation, move money faster, and move money more securely. The Sila API can: 

  • Facilitate ACH credit and ACH debit transaction for U.S. citizens and permanent residents
  • Create a digital wallet with $250,000 FDIC pass-through insurance
  • Verify customer identities compliant with the U.S. Know Your Customer (KYC) regulations
  • Link bank accounts through our partnership with Plaid
  • Program your app’s money using business logic or self-executing smart contracts

Sila can move money faster by allowing more businesses to build fintech applications that allow for seamless and uninhibited money transfers.