A Business Guide to ACH Transfer Limits & Workarounds

With more businesses shifting to electronic fund transfers (EFTs), making payments through the Automated Clearing House (ACH) Network has become essential and convenient. In particular, Same Day ACH transactions have been surging, which transfer funds within the day instead of the typical 2-3 business days. According to the National Automated Clearinghouse Association or Nacha, which oversees the ACH Network, the value of Same Day ACH transactions reached $719 billion in the first quarter of 2024 (a 27.2% increase year-over-year).

As ACH payments become more common, it’s important to understand their limitations to maximize their benefits, particularly the transfer limits. When a business opens multiple bank accounts across different financial institutions (including credit unions), it can be hard to keep track of all the fine print/guidelines on how much and how often funds can be transferred through these accounts. However, if you're unaware of these caps and policies, you might end up paying multiple transfer fees or not receiving a specific payment.

In this article, we’ll look into:

• What ACH payments are
• Why banks have ACH transfer limits
• 4 factors that affect ACH transfer limits
• Strategies for managing & increasing transfer limits

What Are ACH Payments?

ACH payments are money transfers made through the ACH Network, a centralized system all U.S. banks use. This network processes large volumes of credit and debit transactions in batches. These transactions include direct deposits, bill payments, and peer-to-peer (like PayPal or Venmo) or account-to-account transfers. ACH payments are widely used because they’re efficient, secure, and cost-effective compared to other methods like wire transfers and credit cards.

There are two main types of ACH payments/transfers:

• ACH credit: The payer initiates the EFT by authorizing their bank to “push” the funds from their bank account to the payee’s account number. This type of transfer is commonly used for direct deposits, such as payroll or vendor payments.
• ACH debit: Conversely, the payee initiates an ACH debit (or direct debit) transaction, which "pulls" the funds from the payer's account. This transfer is often used to pay bills or a mortgage.

What Are the ACH Transfer Limits?

According to the Bank Secrecy Act (BSA), financial institutions should file reports for daily cash transactions over $10,000 as an additional measure to monitor potential financial crimes, such as anti-money laundering (AML). However, this doesn't mean $10,000 is the standard transfer limit. This cap still depends on banks and Nacha.

Bank Transfer Limits

The maximum amount allowed for ACH transactions differs significantly among financial institutions. They may also have other detailed guidelines, such as cutoff times, limits for third-party providers, and specific account types that are allowed to transfer to external accounts.

For example, here are some of the limits for the biggest American banks:

• Bank of America (BoA): $3,500 per day and $10,000 per week for EFTs between BoA checking or savings accounts.
• JPMorgan Chase: $25,000 per day limit for most accounts, but private clients have a daily $100,000 limit.
• Wells Fargo: EFTs between Wells Fargo account holders made through Zelle are limited to $3,500 per day.

Same Day ACH Limits

Driven by the demand for faster transfers, Nacha increased the limit of Same Day ACH from $100,000 to $1 million per payment in March 2022. This limit applies to all transactions, including business and consumer credits and debits. Any transfers over this limit will be settled on the next business day.

Why Do Banks Have ACH Transfer Limits?

While cutting your payments in batches or waiting an extra day to receive large funds might be annoying, transfer limits are crucial to keeping the financial ecosystem safe.

Banks have these caps for several reasons:

1. Fraud prevention: ACH transactions are easy to initiate and can be vulnerable to ACH fraud (such as account takeovers or phishing scams). Capping the EFT amount can minimize banks’ exposure to these tactics and protect clients.
2. Risk management: The larger the payments, the higher the risks. Cybercriminals looking for a large payout are attracted to high-value transactions.
3. Liquidity management: ACH transfers are not instant and can be reversed under certain conditions. Limiting the amount can help banks avoid significant reversals affecting their liquidity.
4. Regulatory compliance: Financial institutions are subject to various AML laws. Setting transfer limits to tightly monitor and control the money that goes through the ACH Network is one measure to comply with these regulations.
5. Operational efficiency: High-value transactions require stricter (or extra) verification steps and reporting. Keeping most transactions within a specific range can reduce admin work.

4 Factors That Affect ACH Transfer Limits

Understanding the main factors that influence these limits can help businesses strategize how to receive recurrent large payments, manage cash flow, and anticipate potential disruptions to their liquidity.

1. Account Type

Business accounts typically have higher limits than personal accounts because they make larger and more complex payments. Opening multiple business accounts essentially gives you back up if you've reached your limits. In addition, accounts with a longer history of positive transactions and higher balances are often eligible for higher limits.

2. Risk Management Policies

One of the reasons why transfer limits vary is because banks have their own internal processes for determining and managing risks. For example, some banks have lower ACH debit limits because these transactions are more susceptible to fraud or insufficient funds.

3. Customer Verification Level

Banks require thorough verification processes for customers who need higher limits. This step complies with Know Your Customer (KYC) regulations, which mandate financial institutions and businesses to conduct background checks on how their customers use their accounts. Some banks have their own verification programs, like BoA's Safe Pass, where clients can enroll to receive codes or one-time pins for transactions in exchange for higher limits.

4. Regulatory Requirements

Aside from following Nacha’s Operating Rules, financial institutions must comply with federal regulations as they are developed or amended. For example, in April 2020, the Federal Reserve amended Regulation D (Reserve Requirements of Depository Institutions) to remove the six-transaction limit on withdrawals and transfers customers can make in their savings and money market accounts. Additionally, as fraudsters implement more sophisticated schemes, the government might develop more regulations to address these, including changing transaction limits.

Strategies for Managing and Increasing ACH Transfer Limits

Transfer limits can be problematic for businesses with high-volume transactions in the long term. However, there are several strategies to consider to help your company navigate these limits:

• Know your bank’s policies: This may seem obvious, but it's really easy to overlook the fine print when opening bank accounts. Consult with your bank relationship manager or carefully read the terms and conditions to understand how these limits are implemented and see if they have higher limit programs or exceptions.
• Build a good relationship with your bank: Banks are more likely to accommodate requests for higher limits if they understand your financial needs clearly. Ensure you are transparent during the KYC verification process and keep your accounts in good standing.
• Plan for large transactions: Notify your bank in advance if there’s an incoming large payment. This allows them to make the necessary arrangements to process your transaction with as little delay as possible.
• Coordinate with your vendors: For recurring large transactions, develop a protocol with your suppliers, including the number of payments that should be made and when. This ensures you still have good cash flow while maintaining trust with your vendors.

Managing ACH Payments With Trustly

Knowing ACH transfer limits helps you manage your liquidity, strategize for large payments, and keep up with regulations. When integrated with Open Banking solutions like Trustly Pay and Trustly Payouts, you can automate ACH payments, including real-time monitoring of transactions, low processing fees, and same-day settlements for efficient transfer limit management. Our platform ensures your payments are streamlined through real-time connections with 12,000 banks.

Learn more about all these benefits by scheduling a meeting with an expert.