ACH Payment Processing
ACH (Automated Clearing House) payment processing refers to financial transactions that are moved through the ACH network, where funds are transferred electronically from one entity to another. ACH payments are a well-established payment method for conducting financial transactions for individuals and businesses throughout the United States.
In 2018, more than 23 billion ACH transactions took place in the U.S., totaling more than $51 trillion, making it one of the largest, most reliable payment systems in the world.
Benefits of ACH Payment Processing
More small businesses and lenders are taking advantage of ACH payments for many reasons, including:
Lower Cost
Because ACH payments are routed through the ACH network, rather than credit or debit networks, fees are significantly lower than those associated with paper checks, debit, or credit cards. This allows organizations to minimize the cost of processing payments while increasing revenue.
Faster Processing
ACH payments are processed electronically, reducing the lag time associated with traditional paper check payments. Accelerated transactions are available, guaranteeing that funds are posted as soon as possible.
Same Day Credits & Debits
One major benefit of ACH processing is same-day ACH credits and debits. For lenders, same-day credits provide online companies with a way to instantly disburse funds to borrowers to better compete with retail locations. Same-day credits provide merchants with the ability to quickly provide their customers with refunds to improve the customer experience.
On the other hand, same day debits ensure the funds that are requested from a borrower or customer are launched the same day to ensure merchants and lenders receive funds as quickly as possible.
Flexibility and Convenience
ACH payment processing is convenient for both companies and customers by providing multiple ways to pay including mobile, phone, or online payments with either same-day or next-day posting. The ability to set up a recurring payment streamlines processes, saves time and effort by reducing manual work and there are fewer miscommunications and errors.
Easily Disburse and Collect Funds
Lenders can use the ACH network to push funds to a borrower’s account, providing fast, accurate service to customers. Repayments can be scheduled at the same time, automating settlement without requiring additional administrative work.
Improved Accuracy
Electronic ACH payment processing means that human error is reduced, saving time and resources associated with fixing any errors and improving productivity and efficiency in the long term.
How is ACH different from Debit or Credit Card Transactions?
A debit card transaction occurs between the merchant and the customer’s bank, using the debit or credit card network for communication. Because of this, a debit card transaction is subject to the fees associated with that network, making it more expensive to process.
With a credit card, funds are transferred from the card issuer to the merchant upon approval.
An ACH transaction, bypasses debit and credit card networks by using the ACH network to request money directly from the customer’s bank account.
How to Accept ACH Payments
A business can accept ACH payments through a merchant account provider or transaction processing partner. The fees associated with different providers will vary, as will the level of service and types of features that are offered.
Payliance provides low-cost, fast, flexible, and convenient ACH solutions that can be launched almost immediately. Perhaps more importantly, Payliance offers businesses the opportunity to:
Conduct same-day transactions: Payliance’s late cut-off times make same-day transactions convenient to customers. Same-day credit ACH transactions allow you to push funds to your customers, improving customer satisfaction, and providing a competitive advantage to your business.
Improve transparency and visibility: Payliance features such as the virtual terminal, customer dashboard, and cloud-based reporting allow for instant, accurate data analytics to help you make better business decisions at every step. APIs are also available to integrate ACH data with other financial systems, making it possible to have a single view of the financial health of your organization.
For more information on how you can improve the speed and accuracy of your organization’s services while controlling costs and streamlining operations, fill out the form to speak with Payliance’s ACH experts today.
Sources: https://www.nacha.org/news/ach-network-moves-23-billion-payments-and-51-trillion-2018
