What Same-Day ACH Really Means for B2B

Your business — like others — relies on the ability to accept payments. After all, profitability is the top priority for any organization. While credit card remains a leading payment option, many businesses have also turned to ACH payments.

This has been a common practice for B2C businesses (for instance, consumers can pay utilities bills via ACH), but it’s growing more prevalent in the B2B sphere as well. Is your organization considering adopting ACH payment processing? If so, it’s important to understand what that means. Let’s start with the basics.

What is ACH?

Making and accepting payments has evolved quite a bit over the decades, spanning from cash and check payments to electronic payments like credit card and ACH. Now, billions of payments are made each year via ACH transfer.

ACH payments are electronic payments that transfer funds from one bank account to another over the Automated Clearing House (ACH) network. Because this type of payment is fully electronic, it has several advantages over the use of traditional paper checks, including:

  • Uses fewer resources: Paper, ink and fuel for transportation are not necessary with electronic payments.
  • Funding is faster: ACH transfers land in bank accounts quicker than if you were to deposit a check.
  • Efficient reporting: Electronic records attached to each ACH transfer make it easier to handle accounting.
  • Saves employee time: There’s no need to visit the bank to make deposits.

Additionally, processing ACH payments costs less than processing payments by credit card, often for a low flat fee per transaction (as opposed to paying a percentage of the total amount per credit card transaction).

ACH is a batch system, meaning service providers gather payment requests and send batches of transactions to clearing houses at predetermined times. The payments are sorted and sent to receiving banks, and then accounts are debited or credited accordingly. This process used to happen only at the end of each business day, and it would take one to three business days for funds to reach recipients. Waiting for funds became a challenge for many businesses.

Fortunately, this began changing in phases a couple years ago.

The Speed You Need

In September 2016, NACHA introduced same-day ACH payments. Rather than solely processing payment batches once per day, an additional two batches were implemented. Now, same-day ACH payments received by 10:30 am Eastern time settle by 1:00 pm, and those received by 2:45 pm settle by 5:00 pm. Businesses can now receive funds much quicker, which has helped the way many organizations conduct business.

Funds becoming available to recipients by the end of the processing day is already a huge step forward, but that’s not where the story ends. The ultimate plan is for ACH transfers to be made in real time, further adding to the convenience of this process.

Helping B2B Organizations

Within 6 months of same-day ACH rolling out, over 13 million transactions were completed. About a third of those were categorized as B2B payments. That growth continues to prove strong, with a total of 75.1 million transactions in 2017.

With cybersecurity threats constantly growing, there was some initial concern over so many dollars traveling through this system each day. However, NACHA reported no increased fraud reporting since same-day ACH was launched. The ACH payment gateway is verified to ensure secure transactions.

Overall, same-day ACH has found great success in the B2B market. So how can you take part in the growing trend?

You’ll need to partner with a payment processor in order to accept ACH payments. We’ve got your back here at Forte. Our ACH payment solution is simple to use and, more importantly, can save your business time and money. Learn more about Forte ACH processing today!

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