An ACH debit allows a payee to initiate a debit of the payer's bank account, with the funds shifting into the payee's bank account. An ACH debit is typically implemented between entities that plan to do business with each other for an extended period of time. The concept is attractive to a payer that does not want to continually issue check payments or run the risk of forgetting to make a payment. The payee gains the assurance of a consistent payment schedule.
An ACH debit transaction is normally conducted with the prior written approval of the payer, who essentially gives up control over the ability to issue payments.
This transaction can be fraudulent, so many companies install ACH debit blocks on their accounts, preventing such debits except for those that are specifically authorized in advance. Transactions that can be allowed to bypass a debit block include the following:
- A single payment
- A recurring payment
- A fixed dollar amount
- A maximum daily dollar amount