ACH (Direct Debit)

ACH (Direct Debit) is a way to charge a customer by pulling money straight from their US bank account, instead of running a card. ACH stands for Automated Clearing House, the network US banks use to move money between accounts. It's popular for recurring subscriptions and large invoices because it costs a fraction of card processing.

How ACH Direct Debit works

The customer authorizes the merchant to debit their account, providing a routing and account number (or connecting the account through a provider like Plaid). The merchant submits the debit, and the funds move through the ACH network in batches over a few business days. This is slower than a card authorization, which is near-instant, so ACH settlement takes longer to confirm.

Because ACH is a "pull" that can be reversed, payments aren't guaranteed at the moment of submission. A debit can be returned days later for insufficient funds or a closed account — the ACH equivalent of a bounced check.

Fees and trade-offs

ACH is cheap relative to cards. Stripe prices ACH Direct Debit at 0.8% per transaction, capped at $5.00, versus the roughly 2.9% + 30¢ of a typical US card. That cap makes ACH especially attractive for high-ticket charges.

On a $2,000 invoice, ACH costs the $5.00 cap instead of roughly $58.30 on a card — a meaningful saving on a big processing fee.

Where ACH fits

• Recurring billing — lower fees compound across every renewal.
• Large B2B invoices — the fee cap makes card rates uncompetitive here.
• Involuntary churn risk — returns arrive days later, so failed debits and involuntary churn need retry handling. In Europe, the equivalent scheme is SEPA Direct Debit.