ACH (Automated Clearing House) is a payment processing method that every business should utilize. Transactions are completed electronically, allowing merchants to deduct amounts owed directly from a customer’s bank account.
What Happens When I Receive an ACH Payment?
ACH payments are favored by vendors because they save time and do not come with interchange fees. No documents or check numbers have to be exchanged. It’s a straightforward process that’s secure. What happens when you receive an ACH payment?
- First, preauthorized permission is provided by the customer in a verbal, written, or electronic format. This allows the merchant to process the transaction.
- Next, a batch file transmission, virtual terminal, or payment gateway is used to convert the payment into an ACH transaction that is sent to the payment processor.
- The processor presents the transaction to the customer’s financial institution to debit the funds.
- The ACH payment process usually takes anywhere from three to seven days to complete. Recent changes made by the National Automated Clearing House Association (NACHA) have introduced same-day payments.
The Benefits of Using ACH Payment Processing
More businesses are discovering the benefits of using ACH payment processing. The system connects the vast majority of financial institutions operating in the United States. As the world of ecommerce expands, so does the reach of ACH processing. Those who introduce this payment method find that:
- It is more convenient than processing paper checks
- It’s cost-effective making it a viable payment option
- Businesses can reduce the cost of postage and envelopes
- It can be set up to deduct recurring payments automatically
- It’s secure and reliable, preventing the theft of checks or credit cards
Why Should My Business Use ACH Payment Processing?
It can be challenging to keep up with changes in the financial industry. As a business owner, it’s vital to know what’s available to you to better serve your customer base. If you do not currently offer ACH payments, now is the time to look into it. You could be missing out on valuable benefits and more business. Why should you start accepting ACH payments?
- Same-Day Payments Exist, and Customers Love It
Most customers prefer to have debits deducted from their bank account as soon as possible. It’s much easier to keep track of balances when you don’t have transactions in limbo, already processing but still not deducted.
Same-day ACH payments were rolled out in September 2016. It started with credits and transactions of under $25,000 between U.S. banks. Phase two was introduced the same month the following year and expanded the program to allow merchants to withdraw funds the same day. Phase three went into effect in March of this year and requires banks to deposit ACH funds by 5 pm the same day.
- A More Affordable Payment Processing Option for Any Business
Credit cards are convenient but come with fees. ACH costs less for the merchant. There are fees for transactions. However, businesses do not have to pay interchange fees. Interchange fees are the amount paid by the acquiring bank to the issuing bank for the transaction. This makes up the majority of credit card processing costs.
- ACH Payments are Secure for Customers and Merchants
Security is a big concern for businesses and customers these days. Technology makes life easier, but it also presents opportunities for thieves. While there is no 100% safe form of payment, ACH transactions come with protections like merchant-specific registration, micro validation, and encryption.
How Do I Start Accepting ACH Payment
Getting started with ACH processing is easy with the help of South West POS Technologies. Contact us today to learn more about fees, benefits, and setting up this in-demand payment method.