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Do you need to send or receive money overseas? Whether you’re sending an invoice or making payment to a supplier, you might be wondering if an ACH transfer is an option. They’re simple to set up and cheap within the United States, but can ACH payments be made internationally? In this guide, we’ll discuss everything you need to know about using ACH for international payments.
Can ACH be used for international payments?
Yes, you can use ACH for international payments. However, there are a few factors to keep in mind before using this payment method. ACH stands for Automated Clearing House, the network overseen by Nacha. It links banks and other financial institutions within the United States to enable bank-to-bank payments such as direct deposit, bill pay, and others. Although it’s a domestic network, some banks are now allowing customers to send ACH transfers to recipients in foreign countries under the category of remittance transfers.
Not all banks offer an international ACH service yet, although the number is rapidly growing. You’ll need to find out whether your bank offers this service.
How does ACH for international payments work?
To make an ACH payment, you instruct your bank to make the transfer with all relevant details including the recipient’s banking information and the transfer amount. This is processed together with additional transfers by the bank at set times throughout the day. By processing ACH payments in batches, the bank saves time and money. These savings are sent on to the consumers who benefit from a low-cost payment method.
To facilitate ACH international transfers, banks must use a specific reporting process to stay compliant with federal regulations. This is known as an IAT or International ACH Transaction.
How to send an international ACH payment
Here’s how to send an international ACH payment, step by step.
1. Find a bank that offers global ACH transfer services and ensure that your destination country is covered. Your first port of call should be the bank that houses your own business account. Most major US banks offer this service, but it might not be available for all countries.
2. Gather your recipient’s payment information. While specific information will vary depending on the destination country’s legislation, this usually involves the recipient’s full name, local bank account number, and routing number.
3. Provide this payment information to the bank, either through your online bank account or in person at your local banking branch. You should be able to select “international” or “global” ACH transfer as a payment method.
4. Verify the information to make sure all details are correct before confirming the payment. You’ll need to comply with your bank’s security processes at this stage. This usually involves two-step authentication for online transfers.
Fees for international ACH payments vary by bank and destination. They tend to cost more than a domestic ACH payment but are still cheaper than wire transfers. Most are processed within one to five working days.
Alternatives to international ACH payments
While it’s possible to make international ACH payments, it’s not always the best method. Not all US banks offer this service, to begin with. They can also take several days to process. One alternative is to send a wire transfer payment. Wire transfers are processed individually rather than in batches, which allows for faster processing times. Yet you’ll pay more for this speed and convenience – typically between 10 and 50 USD. That means they’re best suited to larger transactions.
If you do business with overseas clients, GoCardless facilitates international payments as well. It allows businesses to collect one-off or recurring payments from over 30 countries at the real exchange rate. Like the ACH system, this involves bank account transfer. The difference is that GoCardless offers the local bank debit option – a customer can send the money in their own currency and it’s received in USD without any need to open a foreign bank account. We also offer transparent pricing to keep costs low - see here for full details.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.