About ACH/bank account payments

What is ACH

The Automated Clearing House (ACH) is a US payment network that processes electronic fund transfers between bank accounts. Unlike card payments that authorize in real time through card networks, ACH transactions are batched and cleared through the Federal Reserve or The Clearing House.

Paradise Gateway processes ACH payments through the Vericheck processor.

ACH transaction types

Paradise Gateway supports two ACH Standard Entry Class (SEC) codes that determine how the payment was authorized.

SEC code	Name	Use case	Authorization method
WEB	Internet-initiated	Person authorizes payment through a website or app	Online consent form, checkbox, or click-through agreement
PPD	Prearranged payment and deposit	Recurring payments authorized by written agreement	Signed authorization form (physical or electronic)

SEC code compliance

Using the correct SEC code is a NACHA requirement. Using the wrong code can result in fines or ACH processing suspension. Use WEB for internet-originated transactions and PPD for pre-authorized recurring payments with a signed agreement.

Processing an ACH payment

Send POST /v1/transactions with type: PAYMENT and the person's bank account details.

Required fields

Field	Description	Example
`type`	Transaction type	`PAYMENT`
`amount`	Amount in cents	`50000` (500.00 USD)
`payment_method.type`	Payment method type	`ACH`
`payment_method.account_number`	Bank account number	`9876543210`
`payment_method.routing_number`	ABA routing number (9 digits)	`021000021`
`payment_method.account_type`	Account type	`checking` or `savings`
`payment_method.name`	Account holder name	`Montgomery Scott`
`payment_method.email`	Account holder email	`scotty@example.com`

Example request

application/json

{
  "type": "SALE",
  "amount": 10000,
  "tip": 0,
  "payment_method": {
    "type": "CARD",
    "pan": "4012000098765439",
    "expiry": { … },
    "cvv": "999",
    "first_name": "John",
    "last_name": "Doe",
    "contact": { … },
    "billing_address": { … }
  },
  "initiator": "CUSTOMER",
  "entry_method": "ECOMMERCE,",
  "recurring": {
    "sequence": "INITIAL",
    "initial_transaction_id": "string",
    "initial_network_transaction_id": "MCC1234567890"
  },
  "metadata": {
    "property1": "string",
    "property2": "string"
  }
}

Example response

{
  "id": "TRANSACTION-03LPSC0TTY9ZXQ5MV0H4Y6W8A",
  "object": "transaction",
  "type": "payment",
  "transaction_state": "authorized",
  "response_status": "Approved",
  "response_code": "00",
  "response_message": "The API request is approved.",
  "amount_requested": 50000,
  "amount_authorized": 50000,
  "correlation_id": "d4e5f6a7-b8c9-0123-def0-123456789abc"
}

The transaction returns immediately with authorized state. This does not mean the funds have been transferred — the ACH network processes the debit asynchronously.

ACH vs. card payment timeline

ACH transactions settle more slowly than card transactions because the ACH network processes in scheduled batches rather than in real time.

Event	Card (TSYS)	ACH (Vericheck)
Authorization	Real-time (< 3 seconds)	Immediate API response (validation only)
Batch submitted	End of business day	Next business day
Funds settled	1–2 business days	2–3 business days
Returns possible	Not applicable (chargebacks instead)	Up to 60 days

ACH returns

Unlike card chargebacks, ACH transactions can be returned by the receiving bank after settlement. Returns can happen for several reasons.

Return code	Reason	Timeline
R01	Insufficient funds	2 business days
R02	Account closed	2 business days
R03	No account / unable to locate	2 business days
R04	Invalid account number	2 business days
R08	Payment stopped	2 business days
R10	Customer advises not authorized	Up to 60 days
R29	Corporate customer advises not authorized	2 business days

Handling returns

Because ACH returns can occur days or weeks after settlement, build your system to handle asynchronous return notifications. Monitor transaction status through GET /v1/transactions/{id} or configure webhooks to receive return notifications.

ACH payouts

In addition to collecting payments, Paradise Gateway supports ACH payouts — sending funds to a bank account. Payouts use the same endpoint with a different transaction type.

Direction	Transaction type	Description
Inbound (collect)	`payment`	Debit the person's bank account
Outbound (pay)	`payout`	Credit the person's bank account

Canceling ACH transactions

ACH transactions can be canceled before settlement using the cancel endpoint.

Original type	Cancel type
`payment`	`cancel`
`payout`	`cancel`

After settlement, ACH reversals go through the ACH return process rather than API-initiated refunds.

Tokenized ACH payments

To avoid storing sensitive bank account details, tokenize the bank account and use the payment token for subsequent transactions.

{
  "type": "payment",
  "amount": 50000,
  "payment_method": {
    "type": "token",
    "payment_token": "PAYMENT_TOKEN-03LPSC0TTY0AYRNZ5VQXS2G3AB"
  },
  "recurring": true,
  "purchase_description": "Monthly service fee"
}

For more information, see About tokenization.

Best practices

Validate routing numbers before submitting. Invalid routing numbers result in R03 or R04 returns.
Use the correct SEC code (WEB for internet, PPD for recurring with signed authorization).
Handle returns asynchronously. Do not treat the initial authorized response as final settlement.
Set recurring: true for subsequent charges against a stored bank account to comply with NACHA rules.
Tokenize bank accounts for recurring payments rather than storing raw account numbers.