What Is an ACH Transfer?

ACH is a batch system. Banks collect payment instructions, sort them, and settle them at set times rather than one by one. This makes ACH cheap for the sender and slower than a wire. It can push money out as a credit or pull it in as a debit. ACH works between accounts identified by a US routing number and account number, so it is a domestic US system. An Indian bank account cannot be paid through it directly. A US client who offers ACH to an Indian freelancer is often paying into a US account that the freelancer holds, or through an intermediary that then sends the money onward.

For example, a US agency offers to pay an Indian designer by ACH. The designer has no US bank account, so the designer asks the agency to pay by international wire to the Indian account.

• Payment route: ACH only reaches US accounts. Knowing this helps you tell clients early to use an international transfer to your Indian account.
• Bank compliance: If ACH money lands in a US account and is later sent to India, the inward remittance still has to meet the FEMA export regulations, including the realisation period.
• Income tax: Income is recognised on what you earn, wherever it is paid. Keep the invoice, the payment record and the bank advice together for your accountant.
• GST: ACH has no GST effect by itself. Export of services zero-rating depends on the conditions in the IGST Act, and your receipt must come in convertible foreign exchange.

An ACH transfer works by sending payment instructions in a batch to an ACH operator, which sorts them and passes them to the receiving banks for settlement. The Federal Reserve describes its FedACH service as one of the ACH operators.

1. The payer authorises the payment and gives the payee's routing number and account number.
2. The payer's bank bundles the instruction with others into a batch file.
3. An ACH operator receives the batch and sorts it by receiving bank.
4. The receiving banks get the instructions and credit or debit the accounts at the next settlement.
5. The payee sees the credit after settlement, which generally takes longer than a wire.

An Indian exporter uses ACH only when holding a US bank account or when an intermediary account handles it. For a plain Indian bank account, ask clients to use an international wire.

1. Ask the client how it pays. If the client's default is ACH, explain that your account is in India.
2. Offer your Indian bank's SWIFT code and account details for an international wire.
3. If you do hold a US account, confirm which routing number the bank uses for ACH.
4. Bring any foreign funds to India through banking channels and keep the remittance advice.
5. Quote the correct RBI purpose code, checked against the RBI purpose code list, when your AD bank asks.

An ACH transfer is a batch payment between US accounts, while a wire transfer is an individual bank-to-bank instruction that can cross borders. A wire is the route an Indian account normally receives.

• Global use: ACH is a US network. It does not send money to accounts in India.
• Instant: ACH settles in batches, so it is not an instant payment.
• Reversible: ACH debits can be returned or disputed under network rules, so a received ACH credit is not always final in the way a wire is. Confirm timing with the bank.
• Same as local account: A local collection account abroad can receive ACH, but money must then be brought to India as an inward remittance.

• ABA routing number: The nine-digit code that identifies a US bank for ACH and wires.
• Wire transfer: A bank-to-bank instruction that can cross borders.
• SWIFT code: The bank code used on the international SWIFT network.
• Local collection account: A foreign-currency account in the payer's country.
• Inward remittance: Foreign money received in India through banking channels.

Every rule and definition on this page is linked to its official source, checked on the dates below.

1. Federal Reserve Financial Services: FedACH (checked 9 Oct 2026)
2. FEMA (Export and Import of Goods and Services) Regulations, 2026, Regulation 5 on realisation (checked 9 Oct 2026)
3. RBI FETERS purpose code list (A.P. DIR Circular No. 84) (checked 9 Oct 2026)