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What Does ACH Stand for?

ACH stands for Automated Clearing House, and it functions as an electronic fund transfer system. It connects banks and credit unions within the ACH network. This is a reliable method for various financial transactions, including direct deposits of paychecks and regular debits for recurring deposits.


This digital fund transfer is called ‘Direct Payment via ACH’. It facilitates straightforward direct payments electronically. Businesses call this facility automatic bill payment, automatic debit, electronic bill payment, etc. 


You can use this facility for ACH credit or ACH debit payments. As the funds are transmitted digitally, the security of your bank information is enhanced. It helps reduce the chances of loss or theft. 

To know about the ACH mandate in detail, the objectives of ACH, the process of registering for ACH and much more, read on.

What is an Automated Clearing House Transaction?

An Automated Clearing House (ACH) transaction takes place between two banks. One, from where the debit transaction originates, and the second, with the receiving bank where the credit entry of the same reflects. 


To successfully complete your transaction, some banks may levy ACH charges. Meaning a fee may be involved, but not all banks levy these charges. Thus, the ACH transaction is an electronic transfer that takes place when you put in a request with your bank. 


Only the individual or entity that is making the payment can initiate it, i.e., someone who wants to transfer and does not receive funds. Additionally, the type of transaction affects the applicable ACH charges. 


Meaning not all ACH transactions carry a charge. ACH deposits do not have any charges, whereas ACH direct payments may come with nominal charges.

ACH vs ECS - A Comparison

ACH’s full form in banking is an Automated Clearing House. It is different from ECS, or Electronic Clearing Service, in the following ways.



A lower number of rejects

A higher number of rejects

Settlement happens on the same day

Settlement happens in 3-4 days

Good dispute management system

No dispute management system

Uses automated processes

Uses manual processes


ACH Debit vs ACH Credit

of ACH transfers are based on how the funds get transferred. Here are the two types of ACH transfers that you must know about: ACH credit and ACH debit.

1. ACH Credit

ACH credit is a type of ACH transfer in which the money is transferred from the payer’s bank account to the receiver’s bank account. Under ACH credit transactions, the money is transferred into the account. For example, you set up a payment through your bank to pay a bill.

2. ACH Debit

An ACH debit transfer is a form of ACH transfer under which the money is withdrawn from the bank account. In this transfer, the payer grants the receiver authorisation to collect payment from their account, as per predetermined frequency for a predetermined duration. 


Under ACH debit, the money is pulled from the account. For example, you set up a recurring monthly payment for your EMI. In this case, the ACH debit will debit the amount automatically.

Features & Benefits of ACH Mandate

Increased Transaction Speed

In the current times, several large-funded transactions take a few days to be successfully transferred. In most cases, cheques are used to receive, send, and process payments, which, however, takes plenty of time. In contrast ACH transfers take a matter of a few seconds to complete a fund transfer.


ACH payments are easy to initiate and process compared to other modes of payment. These payments can also be processed automatically with pre-authorisation. For businesses, it is convenient to automatically receive and review payments, in contrast, to manually review cheques.


While many forms of payments, such as cheques and DDs, are prone to security breaches, ACH is comparatively safer. As digital security measures continue to strengthen by the day, ACH provides more security when it comes to fund transfers.

Lower Costs

While crediting or debiting funds, there are fees and charges that come along with it. ACH has lower processing fees and service charges compared to most other methods of fund transfer.


When it comes to any manual undertaking, there is always the possibility of error. While making manual entries to process funds, it is possible to make mistakes leading to an unsuccessful transaction or transfer. So, by reducing the physical handling of payments, ACH improves accuracy. Moreover, with automated payments, there is less room for error as there is no human intervention.

Objectives of ACH

Depending on the type of ACH, the objectives vary. ACH direct payments and ACH direct deposits have different objectives.

1. You can use ACH direct payments in the following cases:

  • Payment of taxes

  • Payment of EMIs

  • Subscriptions

  • Gifts and donations that are recurring

  • Tuition fee

  • Mortgage loan payments

  • Membership fees

  • Recurring investments

2. You can use ACH direct deposit in the following scenarios:

  • Payroll

  • Pension

  • Annuities

  • Refund of taxes

  • 401K disbursements

  • Dividend payments

  • Interest payments

  • Expense reimbursements

What are e-ACH and e-Mandate?

e-ACH is typically an electronic ACH that allows the use of online portals and electronic transfers to ensure the success of a transaction. e-ACH can be used to either debit or credit recurring payments. ACH e-Mandate is a payment service brought about by NPCI (National Payments Corporation of India) to collect recurring payments.

How to Register for the ACH Process?

An ACH mandate lets you pay credit card bills, utility bills, loan EMIs and other recurring expenses automatically on the chosen date. Currently, there are two ways to register an ACH mandate - through your bank and through NSE. Here’s a quick overview of the process that you need to follow to create an ACH mandate. 

1. Registration of ACH Mandate Via Banks 

You need to follow these simple steps to register for an ACH mandate through banks. 

  • Step 1: Start the process by entering your birth date and your application number
  • Step 2: Wait to get an OTP on your registered mobile number and email address
  • Step 3: Enter the OTP and verify your IFSC code and MICR and update them in regard to your recent passbook
  • Step 4: Verify whether your bank is enrolled for NPCI or API e-mandate

2. Registration of ACH Mandate Through NSE

Here are the steps that you need to follow to register for the ACH mandate via NSE.

  • Step 1: Visit the NCE Mutual Funds website and click on ‘CRM’. Then, choose ‘ACH Mandate Registration’ and enter your IIN number or your customer ID
  • Step 2: Select ‘new’ as your mandate type when asked for the UMRN number
  • Step 3: Opt for ‘e-Mandate’ and make sure the ACH mandate type is set to ‘Online’
  • Step 4: Register e-mandate if your bank account is already registered at the IIN level. Ensure that the chosen banks support e-mandates and are registered at the IIN level
  • Step 5: Click on the ‘Submit’ button to confirm your e-mandate registration
  • Step 6: Enter your Aadhaar number at the bottom of the page
  • Step 7: Wait to get an OTP on the registered number on your Aadhaar card, enter it and complete the registration process
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All About the ACH Form

The ACH form helps with the ease of transactions made through ACH and ensures that the funds are directly credited to or debited from the bank account. A few important details have to be filled in the ACH form, such as:

  • MICR number

  • IFSC code

  • Bank account number

  • Phone number

  • Email ID


Once these details are filled in and the form is submitted, the funds will be directly transferred into your bank account.

Banks that Provide ACH

Several partner banks provide ACH facility, and some of these banks are:

  • Axis Bank

  • Citi Bank

  • RBL Bank

  • HDFC Bank

  • State Bank of India (SBI)


To begin filling up the ACH form with these banks, you could either visit the bank to get the form physically or you could go to the bank’s website to download the ACH form. Procure the form, and ensure to accurately fill in the required details. 


Once you fill in all of these details and submit the form, the fund gets transfers directly to your bank account.

What are ACH Charges?

ACH mandate charges are essentially fees that certain banks and financial institutions charge. Typically, ACH transfers do not incur charges as much as other modes of transfer. However, certain banks charge transaction fees or service fees. The ACH charges are typically charged across 4 areas: 

  • Credit fee

  • Debit fee

  • Discount fee

  • Account fee


As these charges depend on the financial institution, it is best to verify with the bank about their charges beforehand.

ACH Mandate Cancellation

Many people have ACH payments scheduled and pre-authorised regularly for certain payments and subscriptions. However, if you are looking to cancel your ACH mandate, you should either remove the subscription or contact the bank. 

Once you contact the bank, you will be asked to submit a request for the cancellation of the ACH mandate. Once you submit the request, depending on the bank, your ACH mandate cancellation process will begin and get cleared within 3-5 business days.

Requirements for ACH Payments

Check out the requirements that you need to make ACH payments successfully.

  • The recipient’s financial institution’s name

  • The recipient’s account number

  • The type of account provided by the financial institution

  • The ABA routing number of the financial institution

FAQs on ACH Mandate

What is an ACH mandate?

ACH’s full form is Automated Clearing House, and it is a mandate that is raised when a recurring payment is set up. Essentially, you receive an ACH mandate when your payment is due.

How do I check my ACH mandate status?

You can log in to your mobile banking and navigate to the service request. Select the account-related ACH section to track your ACH mandate status. This process of navigation varies based on the bank. For example, ACH mandates HDFC can vary from other banks.

What is an ACH payment?

ACH payment is a recurring payment that is set up between you and a business. It facilitates straightforward direct payments electronically.

Is the ACH mandate safe?

Yes, the ACH mandate is a safe medium for making payments since digital security continues to improve by the day, and ACH also follows the trend.

Is there any penalty attached to ACH payments?

Yes, it is possible to pay a penalty fee if an ACH payment gets declined. To avoid these charges in future billing cycles, you must resolve this issue.

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