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Automated Clearing House (ACH) transfers are accepted as the main electronic method to transfer money from one bank to another in the United States. ACH transfers are used by many people in America due to their cost-effectiveness and ease of use. However, ACH transfers are not supported for international payments.
For instance, US residents looking to send money to people living in India will have a hard time. So how do you make ACH transfers from the US to India? Read on to find out more…
NACHA (National Automated Clearing House Association) is responsible for maintaining the ACH network which is capable of supporting millions of transactions each day.
Unlike wire transfers, ACH transfers are bulk-processed. They are phased, which means there can be a slight delay from when the request is made to completion. Here are those phases:
Initiation - Whether you plan on using personal ACH or business ACH, a transaction request needs to be sent through a payment provider or bank
Batch Processing - ACH transactions have the ability to be grouped, meaning that as opposed to being processed one by one, they can be sent out in bulk to the ACH operator of the Federal Reserve or The Clearing House.
Clearing and Settlement - Once the ACH operator processes bulk transactions, they need to be sorted and sent to the appropriate banks. After that, the needed amount gets credited to the recipient’s bank account.
Completion - Bulk transfers are available in 1 to 3 business days while short notice ones can be set to same-day completion
Since ACH does not support international transfers, users looking to send money from the USA to India must rely on third-party services that use ACH as a funding method while converting funds through other financial networks.
ACH transfers are unreliable when making international payments because the system was established to function only within the United States of America. Unlike other platforms like SWIFT and wire transfers, the ACH network cannot connect with banks in India or any other foreign location.
Although the ACH network alone cannot transfer funds overseas, it is possible to achieve this with the help of third-party services. These services accept ACH from your American bank account and use local banking networks, SWIFT, or other payment services to send the money into Indian bank accounts.
Numerous fintech and money transfer companies allow their customer to use ACH to fund payments while processing them through their banking systems.
The following are the simple steps outlined in the whole process:
Even though ACH itself is unable to send funds abroad, Karbon and similar platforms give the option to fund international transfers through ACH while ensuring the recipient in India is provided with the funds in their local currency.
There are two major ways of sending ACH payments to India. The first method is to use a US bank that provides international ACH services. The second method is to utilize a virtual account provider. For the first method, U.S. banks and money transfer providers use intermediary systems to facilitate international ACH payments. Follow these steps to send money from the USA to India using ACH.
Not all U.S. banks offer international ACH services, so it’s essential to check whether your bank supports this feature. Some major banks that allow ACH-funded international transfers include:
Bank of America – Offers wire transfers and international ACH transfers through its Global Payment Solutions.
Wells Fargo – Supports cross-border ACH payments via its ExpressSend service.
JPMorgan Chase – Provides international ACH services for business and personal banking customers.
Citibank – Facilitates international ACH transfers through its global network.
PNC Bank – Offers cross-border ACH transactions for select business accounts.
To ensure a smooth transfer, you must collect complete and accurate bank details from the recipient in India. These include:
Some U.S. banks have partnerships with Indian banks to facilitate ACH-funded international transfers. This ensures that the transfer reaches the correct destination without unnecessary delays. Common partner banks in India include:
ICICI Bank – Works with multiple U.S. banks and money transfer providers.
HDFC Bank – Supports ACH-based international payments through partner networks.
State Bank of India (SBI) – One of the largest Indian banks, facilitating global transfers.
If the recipient’s bank is not directly linked with your U.S. bank, an intermediary bank may be used for the transfer. This could affect the processing time and fees.
Once you’ve confirmed the details, you can proceed with the transfer through your bank’s online banking system.
By following these steps, you can leverage ACH as a funding method to send money from the USA to India efficiently. However, since ACH itself is a domestic payment system, using a trusted money transfer provider may be a more cost-effective and faster alternative.
If you do not have access to a US bank that supports international ACH payments, you can use a virtual bank account provider like Karbon to make ACH payments. The process is simple. Karbon opens a US virtual bank account for the Indian recipient. The payer then transfers money from his US bank account to this newly created US virtual bank account. This will be considered a domestic transfer and cost negligible or no fees. Once the money arrives in the virtual account, Karbon will transfer the money to the recipient’s Indian bank account.
To make ACH transfers from USA to India using a virtual bank account, the receiver only needs to open an account with Karbon.
Different banks and service providers have different costs when it comes to ACH transfers from the US to India. The domestic ACH fees are either very low or sometimes free, but international ACH transfers have fees that usually tend to be high.
Most financial institutions levy an International ACH fee between $25 to $40 for transfers made to India, but this depends on the financial institution and the user’s account type.
Advance remittance service providers such as Karbon charge much lower fees, as little as 1%, based on the amount being sent.
Usually, the recipient bank in India does not charge anything but it is not always the case. Advise to check different providers to make sure that you are getting the best deal.
An ACH transfer from the USA to India typically takes 3 to 5 business days to complete. The timeline can vary based on factors like the banks involved, any intermediary financial institutions, or additional verification processes.
If you need a faster transfer, consider alternative methods like wire transfers, which can often be completed within 1-2 business days.
In essence, even though ACH transfers are a great alternative for domestic payments within the U.S., they are not as effective for cross-border payments, especially for the U.S. to India market. For those businesses or individuals aiming to make these international ACH payments, there is a way. And that is, working through some third parties or virtual account providers. Most of these platforms use ACH to fund the payment and integrate it with global payment systems like SWIFT to ensure funds are delivered to the Indian recipient.
For businesses looking for a more effective and affordable solution, Karbon provides a well-needed breath of fresh air. Fund transfers originating from the U.S. can use ACH to send money to India under Karbon’s virtual bank accounts for a relatively low fee and at a quicker payment settlement. The integration of technology and simplification of procedures and reduction of excessive unwanted fees ensure that Karbon makes cross-border payments effective and smooth.
Opt for Karbon if you want fast ACH transfers from the US to India.
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