ACH stands for Automated Clearing House. It’s low-cost method to move money from one account to another. When you have payroll direct deposit, it’s done by ACH. When you give your bank account to an insurance company for automatic monthly payments, it’s done by ACH. When you transfer money from a checking account to an online savings account or to a brokerage account, it’s done by ACH. ACH is everywhere.
ACH transfers take longer at some places than others. When I transfer money from Fidelity to my checking account, I see the money the next day. When I do the same from Vanguard, it takes two days. When I do it from E*Trade, it sometimes takes three days. Why is that?
ACH supports both credits and debits. You can ask one institution to move money to another institution (credit, or "push") or you can ask it to get money from another institution (debit, or "pull").
Whether it’s an ACH credit or an ACH debit, the institution at which you request the ACH transfer always takes the lead. It’s called the Originating Depository Financial Institution (ODFI). The institution on the other end is called the Receiving Depository Financial Institution (RDFI). Originating and receiving refer to the ACH transfer request, not where the money comes from or flows to. Whomever you ask to do the ACH is the ODFI.
The ODFI is responsible for making sure they have the authorization to credit or debit the other account. That’s why sometimes you are asked to fill out a form and send in a voided check. The RDFI is required to credit or debit the account on the date the ODFI specifies. Therefore if ACH takes longer at one place than another, the delay is almost always caused by the ODFI, not caused by "the system" or the receiving end.
If the ODFI cooperates, ACH should be a next-day process. You request the transfer today before a cutoff time. The ODFI sends the request to the ACH network in the evening. The RDFI shows it in your account the next morning. That’s how it works if you initiate an ACH transfer at Fidelity or WellsTrade. Everybody else should also be able to do it in one day if they really want to.
Why does it take two days, three days, or even longer at some places? It could be because they use a third party service provider. The third party does the debit first. It makes sure it gets paid the next day before it sends the credit. It takes at least two days in such scheme. Or it could be because the ODFI doesn’t send the request on the same day you request the transfer. They hold your request for extra days.
There are several reasons they hold your request. First, for risk management. If during that hold period you discover an unauthorized transfer request and you notify them, the money hasn’t really left yet. Second, for charging a premium on faster service. A bank may offer a slow ACH for free but charge extra for next-day ACH.
If you like faster transfers, use a more efficient bank or broker. Don’t let them get away with "2-4 days is the standard." The standard ACH service is next-day.
Reference: ACH 102: Who We Are and What We Do, a presentation by Nancy Grant, Senior Director of Research & Standards at NACHA.