Most people have made and received ACH payments, even if they’re unfamiliar with the term. So what is an ACH payment?
An ACH payment, also known as an eCheck, is simply an electronic payment that moves funds from one bank account to another. These payments travel across the Automated Clearing House network with the help of an intermediary that batches and routes funds to the appropriate destination.
Originally developed as a system to replace paper checks, ACH payments have become fairly common. You may have used ACH to pay for utilities and other service providers, or when receiving a paycheck via direct deposit.
What are the benefits of ACH?
ACH payments hold many benefits, for both businesses and consumers. Let’s take a look at both sides of that coin.
Businesses are drawn to ACH because:
- Electronic payments use fewer resources than paper checks. There’s no printing costs, no waiting for mail or transportation, and there’s no manual depositing. Therefore, ACH payments can save money, time, and labor.
- ACH payments are less expensive to process than credit or debit card payments. When you’re looking at a high volume of transactions or customers enrolled in recurring payments, those savings can really add up.
- Accounting is made easy since banks create a digital record for all electronic transactions. You can keep track of income and expenses using this data.
Consumers like paying by ACH because:
- Paying digitally saves the hassle of writing checks, and having to reorder them when they run out.
- Enrolling in automated recurring payments eliminate the need to pay each individual bill. It’s a simple hands-off approach that ensures payments are always made on time (so long as the appropriate funds remain in the associated account).
In many cases, ACH provides a payment method that simplifies how money is sent and received. However, like with all things, there are a couple of potential drawbacks as well.
The first is that ACH is often limited to transfers between US-based bank accounts, so this may not work well if your organization conducts a lot of international business.
The second involves the time it can take to process ACH payments. When ACH was introduced, it would typically take two to three business days for funds to reach their destination. But this changed when same-day ACH payments began rolling out in 2016. Many payment processors now offer this service, which speeds up the time it takes for your business to get paid.
Partnering with an ACH payment company
In order for your organization to accept ACH payments, you need to first partner with a payment processor that offers ACH services (among other services that you seek). Once you’ve established a partner, there are three primary ways you can accept ACH payments.
- Check scanner: You can use a check scanner to convert a paper check into a digital ACH transaction.
- Manual payments: For phone and mail orders, you can manually key in the account information necessary for an ACH payment.
- Online payments: Your website can offer ACH as a payment option within the checkout or billing process.
ACH payments bypass the card networks — meaning they skip the interchange and assessment fees — so they are considerably less expensive to process than card payments. However, different payment processors will have different pricing structures.
Some processors charge a flat rate — generally ranging from 25 to 75 cents per transaction — while others charge a percentage fee —generally ranging from 0.5% to 1% per transaction. Some processors offer lower fees for higher transaction volumes.
You can see why doing your research comes in handy when it comes to choosing the right payment processor for ACH services.
Forte’s ACH services cost only 25 cents per transaction and offer flexible, secure payments on any channel, at any time.