Ach Payment Processing: an Introduction and Benefits
Offering consumers online payment processing alternatives could be the differentiating factor between whether a customer brings their business to you or a competitor. Accepting non-credit card payment options such as ACH payment processing (and eChecks) means that your customer base won’t have to worry about stacking up debt on their credit cards. In addition to saving them a potential credit hassle, there are many other benefits to ACH processing. Merchants and their customers can benefit from ACH payment processing and related features.
It is important to know that ACH payment processing differs from credit card processing in that it does not provide real time authorization of transactions – instead, it allows funds to be electronically debited or credited to a company’s or individual’s deposit account within a few days. This processing enables you to debit customers directly to their bank accounts; accept payments by phone, online, or in-store; set up recurring billing; and convert paper checks into eChecks.
Unlike credit card processing, which usually takes a percentage of the transaction, ACH transactions are a less expensive option for the merchant because they often take one low fee per transaction. In addition, customers won’t have to pay credit card interest rates or the fees associate with using paper check (purchasing the checks and postage). Also, by using the ACH network both customers and merchants can save money by taking advantage of eCheck processing and recurring billing features.
An eCheck is a type of ACH transaction. This process allows a merchant to take a paper check, run it through a check scanner, and submit it for payment electronically. This will save the merchant countless hours running to and from the bank, but process just as if the merchant handed over a paper check.
Another way to process an eCheck is to submit the information provided on a paper check through a secure, web-based system. By entering the Bank name, along with the account and routing number, the transaction can be submitted through the ACH system. This method can be accepted through check by phone transactions, online bill pay, or be set up on recurring monthly charges.
Having the convenience of scheduled payments will help improve cashflow by having payments automatically deposited in your account. In addition, if electronic invoicing is set up with the system, time and money will also be saved by not having to worry about manually invoicing customers. For the customer, they won’t have to worry about incurring late fees or have to worry about collecting paper invoices.
Recurring billing is a convenience that can easily be overlooked, but because both parties save time and money, it is important to make sure it is a core part of a payment processing system.
No longer does a customer need a credit card to make an online purchase. In fact, with the ACH network merchants can accept payments with lower transaction fees. And aside from the merchant benefits, accepting secure, quick processing ACH payments could be the online payment alternative that your customer is looking for.
In terms of security, the ACH network is governed by the National Automated Clearing House Associate (NACHA), which promotes the development of electronic payments, while developing and providing initiatives for risk management – because this is the same network federal banks and government institutions use, this system is highly-reliable and secure.