What Can ACH Processing Do for Your Business?

From computer with physical data tapes that had to be driven from bank to bank, to modern, fully digital clearing houses, Automated Clearing House (ACH) processing has become an integral part of digital commerce. In 2021, over 29 billion payments valued at $72.6 trillion were processed over the ACH Network. To put this in perspective, the amount of money exchanged between consumers, businesses and governments last year could cover the cost of one 2022 Ferrari Portofino Ms for every person in the United States. Contactless payments especially have turbocharged this trend as more consumers seek out frictionless payments on the phone. Whether these take the form of tap-to-pay wallet type experiences or purely digital contactless payments, each of these frictionless payments is an opportunity to employee ACH in your business.  

But let’s get back on track. What is ACH processing, and how could ACH processing impact for your business

WHAT IS ACH?

ACH processing is one of the key ways to securely send and receive money, for credit and debit card payments For example, when your paycheck is deposited into your checking account, your employer is depositing your pay via ACH processing. Or, conversely, if a customer makes a payment for your goods and services, the bank associated with your customer’s credit or debit card can deposit your funds directly to your business account.  

ACH was designed to support increasing payment volumes as the world began to transition to automated payments. In the 1970s, financial transaction volumes were becoming difficult to manage with early computer infrastructure. As a result, the Federal Reserve stepped in to fund an automated system build and use computer programs specifically designed to process and settle payment claims between financial institutions.  

With ACH, merchants can process check and card payments without making authorization requests to credit card networks or issuing banks. Instead, ACH processing goes through the Federal Reserve or the clearing house to secure payments from a Receiving Depository Financial Institution (RDFI). The RDFI then posts the payment into the requestor’s account.  

All of this means that instead of paying network fees to a credit card company, ACH payments cost much less to process. This ends up saving the merchant money with every transaction. And very soon, merchants will have a chance to collect even more money with ACH. 

The National Automated Clearing House Association (Nacha) has repeatedly raised the daily transaction limit for ACH. This means that not only do ACH payments cost merchants less, but they can also accept much larger payments (up to $1 million per day) and recognize revenue faster

ACH VS. CREDIT CARDS: WHAT IS THE DIFFERENCE?  

No matter what payment options you offer, customers want to pay in the most convenient ways for them. Often, this means they will use a credit card or another form of digital and contactless payments. But added convenience can also add costs. So what happens when a credit card payment is processed in the traditional way?  

  1. The customer places their order or makes a purchase. The card information is received at point of sale.
  2. The merchant checkout accepts the card information and sends it to a service to manage the interactions with the merchant’s bank.
  3. The service sends the information securely to the merchant’s bank processor.
  4. The merchant’s bank processor then contacts the credit card network, like Visa or Mastercard
  5. The credit card network then sends the request to the issuing bank for the customer’s credit card.
  6. The issuing bank determines if the purchase is authorized and returns that information to the credit card network who sends it back to the merchant’s bank process.
  7. The merchant’s bank then sends to the merchant’s point of sale confirming if the payment is approved or declined.  

Each of these steps adds cost. Not only does the merchant pay a nominal fee, known as payment settlement or interchange, to process the transaction, but the credit card network and issuing bank charge fees to the merchant for each credit card transaction made by their customers.   

ACH PROCESSING 

At first glance, the ACH payment process looks very similar, but there are a few core differences. 

The ACH processing starts the same way at the point of sale before entering a processor’s system. But that’s where the similarities end.  

  1. The customer makes a purchase. The card information is received at point of sale.
  2. The merchant checkout accepts the card information and sends it to a service to manage the ACH transaction.
  3. The ACH processor handles confirmation by contacting the Originating Depository Financial Institution for origination of the payment.
  4. The ACH payment request is sent through the Originating Depository Financial Institution which then requests settlement from the Federal Reserve.
  5. The Federal Reserve then confirms that the payment is valid with the Receiving Depository Financial Institution.
  6. The Receiving Depository Financial Institution (RDFI) then responds, sending confirmations back down the chain in reverse to approve or deny the payment.
  7. Funds are sent directly to the merchant’s bank account.  

These last three steps are what make the difference in cost and security between ACH and traditional credit card payments. Because ACH avoids navigating several fee-incurring steps, the end result is less costly and more reliable, especially when dealing with high transaction sizes as large as one million dollars. 

STANDARD VS. SAME DAY ACH PROCESSING 

One major benefit of ACH processing is the speed with which a merchant can receive customer funds. For most ACH processors, this means that funds may be available as soon as the next day, depending on when the transaction occurred. However, Same Day ACH is a newer process, one that allows merchants to receive funds the same day the purchase was made.

Why does Same Day ACH processing matter? It’s simple. Same-day processing means merchants collect funds faster. This maximizes the benefit you can generate from ACH payments. Effectively, Same Day ACH lets merchants access their payment funds quicker so that they can invest in their businesses quicker. The increased cashflow from faster processing and fewer fees than processing credit card payments means that businesses who use Same Day ACH can get back to doing what they do best and worry less about transaction costs.  

However, most payment processing companies do not offer Same Day ACH. And if they do, they do not own the technology. This means that merchants working with payment processors not owning the technology receive additional fees for processing Same Day ACH.  

CSG Forte is different. CSG Forte owns the Same Day ACH technology and can offer merchants the ability to receive funds quicker and at a cheaper price than working with other payment processors. 

WHY GET ACH PROCESSING FOR YOUR BUSINESS? 

Simply put, ACH processing allows businesses to receive and have access to payment funds faster. Not only that, but the larger daily transaction limit means merchants can access more payments funds via ACH quicker, as well. Beyond the speed and convenience of ACH, businesses save money on each ACH transaction. Because they don’t need to pay settlement or interchange fees that arise from merchant networks, merchants can secure a larger chunk of each transaction. Especially when considering that compared to cash and paper checks ACH is also more secure and cannot be physically lost, it’s a powerful tool for businesses in many industries, from retail to healthcare and from financial services to real estate and telcos.

With the power that a great ACH solution can bring to your payments, it is no wonder that so many brands are adding it to their toolbox. However, if you’re interested in learning more about ACH processing or how you can get the most out of ACH with Same Day Processing, CSG Forte can help.

Ready to learn more about ACH and how it can drive more value for your business? Check out CSG Forte’s ACH processing capabilities.  

Million Dollar Payments: Nacha Boosting Same-Day ACH Maximum

Think of your favorite news outlet, any news outlet. Chances are, if you visit their site right now, the leading topic will be the economy. From inflation to new job numbers, several metrics and topics are commonly discussed when analyzing the economy. However, the Automated Clearing House (ACH) network often goes overlooked in economic discussions. And it definitely shouldn’t—with over 7.5 billion payments valued at $18.9 trillion in the fourth quarter of 2021 alone.  

With payment volumes and values continuing to grow, new rules are needed to foster the growth of the ACH network. The National Automated Clearing House Association (Nacha), an organization that governs and facilitates the ACH Network, develops standards and rules to ensure the ACH Network operates smoothly, and that payment information transfers securely and quickly.

In response to substantial increases in ACH payments, Nacha announced a rule that will increase the same-day ACH spending limit. Beginning March 18, 2022, businesses will be able to transfer same-day credit and debit payments up to $1 million, up from the current $100,000 cap.

And with more verticals likely to adopt this because of the increasing amount of payments they can accept, there’s never been a better time to start offering this payment option. Get paid faster, lower payment processing costs and easily manage recurring payments.

 

Choose CSG Forte for Same-Day ACH Payments

CSG Forte is the leading payments provider of same-day ACH, supporting over 73,000 merchants. With a best-in-class solution and decades of experience, we deliver a scalable and seamless solution to companies operating in a wide variety of verticals, including integrated software vendors (ISVs), healthcare, property management, government, insurance, enterprises and utility organizations.

Our payments platform can turn what was once an operational expense into a revenue generator through our revenue optimization solutions. Our platform optimizes ACH payments by validating payments in real-time, automatically re-presenting failed payments and keeping recurring payments on track.

Want to learn how you can optimize your ACH payments and take advantage of the rule change? Click here to learn more.

 

 

 

What Are NSF Payments?

Handling nonsufficient funds (NSF) payments accurately and efficiently helps businesses protect themselves from financial losses by minimizing the impact of unpaid transactions. Promptly addressing NSF payments through clear communication, compliant follow-up procedures and timely resolution enables recipients to recover funds and prevent further losses. Streamlined handling can also help businesses maintain strong customer relationships, reducing the likelihood of service disruptions due to incomplete payment.

At CSG Forte, our recovery solutions can help equip your business to handle NSF situations effectively. Our re-presentment options enable you to recover the funds for each NSF payment at no charge. More importantly, these automated solutions save significant time and resources, allowing you to focus more on the responsibilities that matter most for your business.

What Is an NSF Payment?

An NSF payment is a returned check or Automated Clearing House (ACH) network payment that was unable to be completed due to nonsufficient funds. This means the bank has refused to honor the payment because there isn’t enough money in the account to cover it. These are often referred to as bad or bounced checks.

When the recipient tries to take payment, the bank will return it due to insufficient funds in the account. This situation can result in fees for both the payer and the recipient trying to collect the funds.

The Differences Between Overdraft and NSF

Anyone who has tried spending more money than what’s available in their bank account has likely been issued an overdraft charge or an NSF fee. Although many believe the two terms are interchangeable, there are some critical differences between them:

  • Overdraft fee: Banks typically charge overdraft fees when they allow a transaction to process that would have otherwise overdrawn an account. Customers can view an overdraft as a temporary loan from the bank, with the expectation of paying back the amount the bank covered plus an overdraft fee.
  • NSF fee: Banks commonly charge an NSF fee when an account lacks the funds required to cover a transaction and the bank doesn’t permit the transaction to process, resulting in a bounced check or denied electronic bill payment. A bank could impose an NSF fee when the account holder opts out of overdraft protection, surpasses the bank’s limit for overdraft protection or issues a payment that exceeds the amount of money in their account.

What Triggers an NSF Charge?

Several common causes of an NSF payment include unpredictable cash flow, inadequate fund management, delayed or missed payments and unexpected expenses.

Specific situations that may incur an NSF fee include:

  • A check that bounces: A bounced check means there wasn’t enough money in an account to cover the amount written. The business that accepted the check could issue a fee to the check writer in addition to a fee charged by the bank or credit union.
  • An electronic ACH payment that a bank doesn’t cover: When a bank processes an ACH payment and the account has insufficient funds, it will decline the transaction and may impose an NSF fee for the unsuccessful payment attempt.
  • A debit card purchase: A bank or credit union could issue an NSF fee if it rejects an attempted debit card transaction that exceeds the available funds in an account. NSF fees for debit card transactions are highly uncommon because most technologies can identify the funds a purchaser has available.

What Happens When an NSF Payment Is Issued?

When an NSF payment occurs, a number of negative consequences may follow. The financial institution of the person issuing the payment makes one of two choices.

Allowing the Payment

The bank may decide to let the ACH payment or check push through. This, however, would put the account holder into an overdrawn status. For some banks, this means they will charge a fee simply for overdrawing, but may continue to charge for each day or certain amount that they are over. It can end up burning quite a hole in the wallet.

Refusing the Payment

The bank may refuse to honor the payment. The bank will not allow the funds to be processed, and the account holder will likely be charged a fee just for issuing the payment without having funds available.

Potentially, the returned item could sink the depositor’s account into overdrawn status, also initiating an overdraft fee. Banks consider both the depositors and the account holders as being responsible for the NSF payment, and they have no problem making it a very expensive mistake.

 

How do You Protect Your Business From NSF Payments?

NSF payments can be very frustrating and costly to businesses that need to process the transactions. Some businesses decide not to accept ACH payments or checks at all as a last resort. However, this choice limits payment options for your customers.

For many businesses, accepting paper and eChecks is a wise decision. This practice gives customers the flexibility of selecting a payment option that works for them—and many people just want to simply have a payment come right out of their bank account.

But how can businesses handle NSF payments? It’s wise to have a plan set into place so that when NSF payments appear, it isn’t a complete disaster. NSF re-presentment is your best option, as it allows you to recover the funds for each unsuccessful ACH transaction.

 

What is NSF Re-Presentment?

When an NSF payment occurs, re-presentment will simply re-present the payment at a later date. This way, the payment has another chance to clear. CSG Forte’s NSF re-presentment option lets you select the date you wish to re-present the payment, enabling you to choose a time when you think there is a stronger likelihood that the funds are available.

You may know, for instance, when your customer gets their paycheck. Scheduling NSF re-presentment on or directly after this date increases your chances of accessing the funds and clearing the payment.

 

The Benefits of Using Recovery Solutions From CSG Forte

Our Recovery Solutions allow businesses to automate the process of recovering NSF payments. We will attempt to re-collect NSF payments up to two times on your behalf for ACH payments, saving you significant time and hassle. Benefits you’ll enjoy with this service include:

  • Improved payment recovery: Our smart re-presentment functionality allows companies to re-present payment when they will most likely receive a recovered payment.
  • Boosted revenue: Besides receiving the complete value of recovered payment, your business will receive part of the collected NSF fee and experience a revenue share.
  • Easy implementation: With a quick and simple implementation, you’ll be up and running in no time.
  • FCRA and Nacha compliance: Recover NSF payments with peace of mind. Our Recovery Solutions meet Fair Credit Reporting Act (FCRA) and Nacha regulations.
  • Reduce service disruptions: Improve the customer experience by reducing service disruptions due to incomplete payment.

How It Works

At CSG Forte, we make collecting NSF payments simple. When you’re hit with an NSF payment, our solutions will automatically attempt to recollect the ACH or eCheck payment up to two times.

Get in Touch With Us Today

Contact us today to learn how one large enterprise organization recovered $78M in principle through CSG Forte’s Recovery Solutions.

 

What’s a payment channel?

Since all of our recent chatter about omni-channel is centered on multiple channels, here’s a quick breakdown on payment channels and what we offer.

What is a Payment Channel?

A payment channel is basically any way that a customer might make a payment or anywhere that you (as a merchant) might accept a payment. This is slightly different from retail channels, which might include bricks-and-mortar, catalogs, and online shopping/eCommerce sites. Payment channels are generally related to these retail channels, but are more specifically how the payment might be made: physical POS systems, phone/IVR payments, online checkout solutions, and mobile payment options, for example.

So these correlate to retail channels, but leave some room for overlap. For example, at a bricks-and-mortar retail channel, you might process payments on a physical POS system (ie the cash register), as well as on smartphones or tablets within the store. Your catalog might accept payments by phone, but also integrate nicely into the omni-channel concept so that customers could walk into your bricks-and-mortar store to pay at the POS, or they could shop the catalog online and pay via online checkout. There is a relationship between payment channels and retail channels, and since you definitely want to start creating a cohesive experience via omni-channel, it’s important to consider what payment channels you might implement.

 

Payment Channels CSG Forte Supports

CSG Forte offers full payment processing support for the following channels:

Physical POS

We can supply card readers, help build a solution with our Virtual Terminal that turns existing computers into instant workstations, and more.

Phone/IVR

Comes with your own toll-free number and script-building assistance.

Mobile Payments

Use the iDynamo and our mobile app to instantly take payments on smartphones and tablets.

Online Payments

Our new Checkout is smart, speedy, and stocked with options.

You can accept both credit cards and electronic checks on any of these channels, and each channel comes with our cloud-based Virtual Terminal for transaction management and our powerful payment gateway services. All of the reports funnel into the Virtual Terminal, so you don’t have to worry about piecing things together on your own.

 

Payment Channel Solutions For Your Business

These payment channels don’t necessarily have to correlate only to retail, as well. Government agencies could implement online payments to accept taxes on the web and build a smart physical POS system for in-office payments. Veterinary clinics, dance studios, and other businesses can all benefit from considering an omni-channel approach.

And what’s easier than setting up all of your channels with one company? Get started with CSG Forte today. Give us a call at 866.290.5400 to see what we can do for you.

 

Cryptocurrency: Explain it to me like I’m 5

If you were paying any attention to rumblings in the payments industry in the mid-2000s, you probably heard someone say the words “Bitcoin,” “cryptocurrency” or “blockchain.” Following these utterances, you probably met the stare of the person talking to you with either a blank look or a look of skepticism, as you probably connected these terms with the dark web and nefarious purchases.

Now, cryptocurrency, and Bitcoin in particular, is becoming more mainstream – even if many Americans are still confused by the mysterious world of digital currencies. Many skeptics consider digital currency to be a speculative bubble. Some consider cryptocurrency to be the future of payment processing. Either way, let’s hop into the discussion to explain what exactly cryptocurrency is and why it should matter to you.

 

What is a Cryptocurrency?

Cryptocurrency is the general name given to represent different digital coins. Many people are most familiar with Bitcoin, but there are various altcoins that compete with Bitcoin in different ways. Ethereum, Ripple and Litecoin are some major altcoins you may have heard of (but there are others in the market).

Ethereum, Ripple and Litecoin operate a bit differently from Bitcoin. Bitcoin operates off a blockchain, which essentially is a digital ledger of all transactions that occur with the specified cryptocurrency. To put it really simply, the blockchain is managed by ledger-keepers, who are also called “miners.”

While trying to explain the inner-workings of blockchain gets super technical (just think really, really big computers with lots of processing power), just know the ledger-holders must all agree on any changes to the blockchain for every transaction. This keeps everything (the ledger, your transactions and so on.) accurate and secure. For Bitcoin miners, they can earn a specific number of Bitcoin just by keeping track of the transactions that occur – also commonly called “mining.”

 

How Does Cryptocurrency Work (and why do people like it)?

Cryptocurrency is founded off the idea of decentralization. Unlike most payment options to-date, cryptocurrency has no general need for the intermediary, i.e. the banking system. This intermediary system has been integral in maintaining the integrity of our monetary system.

Banks, especially when it comes to digital transactions such as stocks and non-cash transactions, help validate transactions. This is especially helpful in preventing “double-spending” in which a transaction is replicated, primarily through error or from a matter of hacking. The claim that Bitcoin makes, however, that that the blockchain system is more secure than any banking system, processes transactions faster than any bank can dream and gives the transactional authority back to the person who holds the money.

Cryptocurrency in its essence is a peer-to-peer method of transacting business – and it’s for this reason that cryptocurrency got a bad rap in some circles. People who have been in-the-know about cryptocurrency remember the coins being used to fund dark web transactions and other (sometimes illegal) enterprises. No longer is this the main use case, however. Now, people who own Bitcoin and other altcoins can use their money to purchase items found on the common market.

Whether you believe that cryptocurrency is just a flash in the pan of the payments industry, or you believe cryptocurrency to be the future of our global economy, most can agree that it’s an exciting time to witness the volatility and growth of these digital markets.

SEC Code Glossary: A Quick Guide to Entry Class Codes

In the world of electronic payments, NACHA (National Automated Clearing House Association) governs and dictates the regulations for processing electronic transactions through the Federal Reserve. The regulations are very serious, utilized in legal proceedings regarding transactions and relied upon by banks, payment processors, and both federal and state governments. NACHA keeps the order for the industry, and it’s important to abide by every one of their regulations.

Whenever a transaction is submitted, NACHA needs an SEC code along with it.

 

What is an SEC code?

SEC stands for “Standard Entry Class,” and is basically a code that denotes the way a customer authorized a payment. When you apply for payment processing, sometimes you will find that certain types of payment methods are associated with lower costs.

For now, we’re going to give you a quick glossary of SEC codes for easy reference.

Common SEC Codes and Their Meanings

POS/POP

POS (Point-of-Sale) and POP (Point-of-Purchase) entries refer to single debit payments made in-person via credit/debit card (POS) or converted check (POP). Both the card and/or the check are used to record the account information in association with the payment, and the original method of payment is then returned to the customer.

PPD

PPD (Prearranged Payment and Deposit Entry) refers to Direct Deposit entries and any Preauthorized Bill Payment applications. In this way, these payments can be both debits or credits (meaning funds can be removed or deposited into an account) and either single or recurring (occurring as a one-time payment or scheduled multiple payments).

WEB

A WEB (Internet Initiated Entry) is simply any debit via the Internet. These entries may be single or recurring.

These debits must be authorized by the receiver via the Internet. In other words, if the authorization itself was actually received in person, via U.S. Mail or by phone, for example, even to actually suffice for a payment from the Internet – it’s not really a WEB entry. However the authorization was received is how the transaction must be classified via the SEC code.

Also bear in mind you may only initiate a credit here as a reversal of a WEB debit. You can’t submit a credit using the WEB entry code.

TEL

TEL (Telephone Initiated Entry) entries are single debit entries authorized via the telephone. In this oral authorization entry there must be a pre-existing relationship between the receiver (person authorizing the payment) and originator (person/entity receiving the payment). If there is no relationship already in place, then the receiver has to make the phone call.

Additionally, all TEL transactions have to be recorded and kept on file for a minimum of two years from the date of the transaction. If the transaction is not recorded, then the originator needs to provide the receiver with a written notice that confirms the oral authorization before the payment settles.

CCD

A CCD (Corporate Credit or Debit) is also known as “Cash Concentration or Disbursement.” These entries can be either a credit or debit – and occur specifically between corporate entities. It can be a single entry or recurring.

All business bank account transactions are listed under this SEC code. A signed authorization has to be obtained either separately or included in the contract between the businesses prior to the transaction date.

ARC

An ARC (Accounts Receivable Entry) is defined as a check conversion that is originally received via the U.S. Mail. This includes the USPS (United States Postal Service), as well as courier services like FedEx and UPS. According to NACHA, this does not include personally delivered or night drop-box items. Corporate checks are also not included.

There’s also a slight change you’ll run into these less common SEC codes:

CTX

CTX (Corporate Trade Exchange) entries are initiated by originators to pay or collect their obligations. The funds are transferred to other organizations and so mirror the same business entity requirements as the CCD entry code. Both credits and debits are allowed.

RCK

The RCK (Represented Check Entry) entry refers specifically to single debits that occur as a result of check representment. Check representment occurs after an item is returned NSF (Non-Sufficient Funds), or is bounced. The service will simply represent the check at a later, scheduled date after it is returned. Some businesses choose to initiate check representment in order to attempt to recollect their funds. For merchants that use RCK entries, a notice must be displayed visibly at the POS.

BOC

BOC (Back Office Conversion Entry) entries are single debit entries that are initiated by source documents (checks) received at POP or manned bill payment locations (in-person). These checks are collected first then converted to ACH during back office processing.

CIE

A CIE (Customer Initiated Entry) is a credit initiated usually through a bill payment service by an individual. These are meant to pay an obligation.

XCK

The XCK (Destroyed Check Entry) refers to a replacement entry that is initiated when an original check is unreadable, lost or destroyed and cannot be processed.