What are ACH Payments? | 5 Reasons To Accept ACH Payments
What is ACH?
ACH (Automated Clearing House) is a system used to transfer money electronically between bank accounts in the United States. It’s operated by an entity known as Nacha (previously NACHA – National Automated Clearing House Association) which is sometimes known as”the ACH system as well as the ACH scheme.
Processing payments through the ACH network was in place in the late 1970s. ACH transferred financial transactions of greater than $72.6 trillion by last year. This is an increase of 17 percent over the year before. These transactions included consumer, government and business-to-business transactions and international transactions.
What exactly is the definition of an ACH payment?
A ACH transaction is kind of bank-to-bank electronic payment that is available within the US. It’s processed through the ACH network, instead of being processed through card networks like Visa and Mastercard. A ACH payment is commonly known as an ACH transfer or ACH transaction.
There are two major categories of ACH payment types:
- Direct Deposits
- Direct Payments
Direct Deposit is a broad category of deposits from companies or the government to a consumer. This includes reimbursement of expenses for employees government benefits, tax or other reimbursements annuities and interest payment.
Direct Payment is the use of money to make payments, whether by organizations or individuals. This kind of ACH transaction is the main topic of this guide. every mention of ACH transfer, payment ACH transfer, ACH transactions in the guide relates specifically to Direct Payments unless explicitly stated otherwise.
5 Reasons To Start Accepting ACH Payments
For businesses with a small budget one of the biggest challenges in cutting down on the market share they must expand is to find ways to make the process easy for their customers. One of the most effective, fastest ways to go about it is by accepting the payment methods your customers prefer to make use of.
This is why almost every small business today accepts credit cards, including pop-up sellers that run independently and only in part-time capacity. This is also the reason why businesses are opting for ACH payment options for businesses that rely on e-commerce. The trend towards ACH payment processing is increasing for traditional retail stores however, particularly because processing options are becoming more readily available. These are the top reasons it’s a great idea to create ACH an alternative for your customers no regardless of the field your company is.
1. It’s Often the Cheapest Option
Processing checks is waiting for the payment to be processed for your company. Customers, for instance, are keeping a physical checkbook as well as paying for the items. ACH permits a deduct out of your checking account, without any additional fees and therefore, customers can make use of it without needing to go through a small amount of checks in paper. When the ACH transaction is denied it is a simple matter to decline the transaction unless you have another payment option that is available. While there may be costs associated with processing, they’re typically less than the fees associated with processing a similar payment with a credit card.
2. Transactions Complete Faster Than Paper Checks
ACH is instantaneously verified and cleared in a matter of minutes and you don’t need to be concerned that a transaction will bounce, as the checks do. This could lower the cost however, it generally acts as a great security measure against fraud by customers. It is more difficult to reverse an approved ACH transaction than it is to set the chargeback in motion which requires you to approve the refund, which is usually not possible.
3. It Makes Managing Your Finances Easier
Payments made via credit card can take up to five days to be deposited into your business’s account for checking after an authorization is granted however, checks can take longer at times. In contrast the process of payments made through an ACH payment is made instantly, meaning that when a customer departs your store or an online purchase is processed for shipping , you’ve already got cash in your account. This helps you to fulfill your obligations as you make the cashflow work to your advantage. In the end, it’s good business sense to go for any strategy that can reduce the gap between transactions being recorded on your books and the cash that appears in your account.
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4. Widen Your Customer Pool
Online businesses are in a unique position to increase sales when they adopt ACH processing for many reasons. Companies that work with other businesses typically find their customers prefer to to pay their bills electronically, and not relying on methods which charge the highest interest rates, which some business credit cards have to. This is particularly applicable to large orders or agreements that permit clients to pay you directly in installments after the project is complete such as certain manufacturers make when purchasing materials that require several deliveries. For companies that are public facing, ACH allows you to connect with customers who aren’t able to make use of a credit or debit card due to personal reasons, and even those who don’t have any.
5. Attract Customers With Forward-Thinking Policies
This final reason for accepting ACH payment is difficult to measure as a percentage of overall advantages, but it’s not more real than the money and other justifications. That’s the reason it is attractive to those who do not use ACH. Customers who choose either debit or credit transactions will remember your pledge to provide the widest selection of payment options that makes you stand out from other companies who don’t. This shows a willingness to be able to meet the customers whom you serve wherever they’re where they are. It could also be an excellent reason to use word-of-mouth marketing since people who do not opt for ACH will pass the word to those who do in the right conditions.
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Finding the Right Payment Processor
ACH Payment processing a distinct service that is distinct from other types in electronic processing, such as NFC Chips and credit cards therefore typically, it needs its own dedicated payment processor. However, this isn’t always the case however. If you choose an entity that provides both of these services, you will can streamline your payments management. That means you’ll have less steps to troubleshoot and less individuals involved in the event of any problems when you begin. Set up your account today using Binary Gateway and start letting your customers know that you accept direct electronic payments through ACH anytime it meets their requirements. It’s an easy add-on to your existing system, whether online or offline and offers you a brand new opportunity to serve your customers regardless of where they may be.