When it comes to banking, the Automated Clearing House (ACH) makes it possible to transact electronic payments and automated money transfers. In other words, it makes it easier to move money between banks without being dependent on cash, credit card networks, paper checks, and wire transfers. This ACH payment processing guide is a brief overview outlining some of the most common FAQs.
What Does ACH Do For Customers?
You can get paid by your employer quickly, reliably, and safely. This means that you don’t have to wait for your paycheck to arrive or to be deposited to your bank.
It also automates your payments even when you forget to pay on time. Additionally, it helps you make purchases online without using a credit card or check. So you get to pay faster without the need for credit card processing fees.
What Does It Do For Businesses?
Businesses can benefit from it via several features, which include the following.
- Low cost and non-labor-intensive method of transferring money
- Pay employees without printing checks or paying postage
- Get paid by customers easily, quickly, and regularly. So you can enjoy no more cash flow crunches that depend on when you go to the bank.
- Enjoy lower processing fees in contrast to credit card swipe fees.
- You can pay suppliers or get paid by vendors that you can easily track and safe to use because it provides an instant electronic record of everything.
How Can I Receive ACH Payments?
Basically, it helps customers get paid faster without any automated payment and without waiting for the check to clear.
If you are into business, you can receive payment by partner with a payment processor. So you can ask you existing payment processing service providers if they are able to handle ACH payments for you.
- Banks where your business accounts are kept
- Company that processes your credit card payments
- Popular programs or accounting software providers that allow you to create invoices and accept payments
How Much Does ACH Cost?
Any size of business can benefit from ACH. Therefore, you can pay less if you have higher volumes. However, small businesses are charged 3 to 5 times more to the service providers.
But depending on the average ticket size, the costs might still be competitive with the processing of debit card payments. So look at the big picture when you evaluate alternatives.
Take note that although it might not cost you anything to accept checks, you have to deal with the time when dealing with them. Moreover, funds might not get directly into your account as quickly.
What Is The ACH Payments Processing Time?
Typically, traditional ACH payments are processed within 2 to 3 business days. But holidays and weekends can also slow down the process. That said, that is quite slow in the on-demand world of today, particularly for an electronic system.
Fortunately, same-day ACH payments were initiated in 2016 in which its functionality is expanding. Thus, faster ACH payments are expected to arrive soon.
Overall, ACH payment enables the collection of payments electronically from customers in a more convenient and easier way. It is either single-entry or recurring payments collection method by directly debiting the checking and savings accounts of the customers.
However, the downside is that the ACH network will be unable to provide real-time authorization of funds compared to the credit card network. At the same time, the ACH network only operates on banking days and not on holidays.
If you have any more questions related to this ACH payment processing guide, please reach out to us directly!