Don’t give away more than you’ll realize in savings on payment processing fees. Whether you’re making a payment or receiving one, business to business ACH transfers are typically much less expensive than wire transfers, checks, credit card payments or debit cards. The Automated Clearing House (ACH) payment railway facilitates fund transfers from one bank account to another. ACH is the main computer-based network in the US used for processing electronic funds transfers. It works differently than how credit card payments are processed. To learn more, read our small business guide on ACH Payments.

We’ve also rounded up some of the options for taking instant ACH payments here. With a customer’s authorization, a business can collect payments directly from their customer’s account. For this reason, the ACH network recommends having an established relationship with a buyer before accepting eCheck payments for products. Options like cards, B2B invoicing, bill pay, and subscriptions are more suited for e-commerce. For example, when someone pays with a check at a grocery store, the cashier runs it through a Check21 machine. The physical check is then converted to an electronic transaction that processes over the ACH rails.

Stax By Fattmerchant Payment Processing

Blueprint does not include all companies, products or offers that may be available to you within the market. Here are the benefits and drawbacks of using ACH payments in your small business. The eCheck—AKA the electronic version of a paper check—is one common example of a type of ACH payment.

ACH-only processing is a possible option for cannabis merchants who might otherwise be limited to operating on a cash-only basis. Instead, the PSP creates a communal merchant account on behalf of multiple merchants. One nice benefit for online merchants is that the payment gateway software is typically already included with a PSP.

Disadvantages of ACH payments

Don’t feel like you need to spend a lot on incentives; the key is finding the right motivation. But if your customers firmly resist ACH payments, it may be accepting ach payments worth offering them an incentive to make the switch. If you ask at the end of the month, when payments are already in process, you probably won’t succeed.

This contactless option is another way people can quickly and accurately send or request money through PayPal. Users can even download their QR code so they are able to share their account even if they don’t have an internet connection. As a business owner, you’ve probably heard of ACH payments, but might not be familiar with how they work.

How to accept ACH payments as a business

One of the biggest draws to using ACH is the lower processing costs in comparison to credit and debit card payments. The savings you receive in lower fees come at the expense of longer processing and settlement times. ACH payments are electronic payments made between bank accounts and are mostly used for recurring payments like subscriptions, bill pay, and direct deposits. That’s why in most cases, banking information from ACH payments is kept on file for later use. Accepting ACH payments from your customers replaces paper checks with electronic funds transfer. Cash flow and operational processes related to one-time or recurring bill payments are improved since funds are automatically pulled from the customer’s account.

• Don’t shy away from explaining how ACH transactions benefit your business, why ACH is your preferred payment method, and how your customers can benefit from ACH, too.
• Standard settlement typically takes 3-5 business days and some providers, like PayJunction, make funds available the next day.
• They make it easy for your customer to pay for a subscription or membership.
• Direct Payment covers the electronic movement of funds to make or receive payments, both by individuals or organizations.
• If you’re in the US you’ll be able to arrange a Wise transfer online or in your Wise app, and pay using a selection of methods including ACH vs wire.
• Every good salesperson knows it’s not enough to ask just one time.

And if you want to convert your funds, you’ll have access to the mid-market exchange rate, with no hidden fees. Despite their benefits, ACH payments are not without challenges. Check out the Chase Auto Education Center to get car guidance from a trusted source. Open a savings account or open a Certificate of Deposit (see interest rates) and start saving your money.