A majority of businesses offer to accept credit, debit and prepaid Visa cards as a payment method. Despite the decline in popularity in recent years, paper checks are still one of the payment options accepted by many merchants. However, another alternative payment method that gets constantly overlooked is ACH payments.
ACH payment processing is actually an extremely effective payment solution for many business sectors, especially for those organizations who are dealing with recurring billings, direct deposits, non-profit and charity activities, as well as e-commerce and online retail. This article will look into the mechanism of how ACH payment processing works and why this solution is advantageous to both merchants and consumers .
What is ACH Payment Processing?
Automated Clearing House (ACH) is a payment solution that electronically transfer funds from one bank account directly to another. It is under the operation of National Automated Clearing House Association (NACHA) and it settles payments in bulk batches throughout the day. It is one of the most efficient payment method for both businesses and consumers.
ACH payment processing is extremely efficient compared to conventional payment methods. Traditionally, paper check payments involve many time consuming but necessary procedures, such as printing, cutting, signing, verifying, delivery and mailing, waiting for the mail to arrive, as well as transporting it to the bank and waiting for the check to clear. The entire process is not only time consuming, but also eats up your company’s manpower, such as having to assign staffs to transport these paper checks to the bank during office hours. With ACH payment processing, the entire process is automated and computerized. Shortening the process time as well as freeing up manpower for more productive tasks. In addition, since payments are electronically executed and automated, it also means less humans are involved in the payment process, which reduces the possibility of manualerrors such as misplacing or damaging a check.
ACH processing is also a superior payment choice when it comes to the aspect of security. On the contrary to paper checks, ACH transactions will not go through the mail, mitigating the possibility of a check getting lost in the post, encountering rain damage, accidentally falling into the wrong hands or other potential damages which cannot be controlled internally. With ACH processing, all transactions will be implemented electronically, which means they are less likely to be tampered with, enhancing payment speed and security for both the payer and receiver.
From a company’s perspective, ACH payment processing is also more advantageous because it is less open to disputes when compared with credit card transactions. Payments made through credit cards can be subject to chargeback dispute for many possibilities, for example, unauthorized transactions, misleading product description, as well as clerical errors and frauds. With ACH processing, there are only three possible scenarios where a dispute may occur: the transferred amount was not the authorized amount, the transfer took place earlier than the authorized date, or the whole thing was never authorized to begin with.
Competition is inevitable in any industry, and merchants need to proactively look for new ways to save money on business operations. ACH payment processing can help companies save a sizeable amount of money on transactions, which is also the main reason to why ACH processing is an attractive payment option to many.
Firstly, ACH payments eliminates the reliance on paper checks, which means the company no longer need to waste money on printing, transporting and allocating staffs members to waste time physically banking them in. Moreover, ACH payments can save you money on transaction fees. Credit card payments can charge your business up to 4 to 5 percent on each transaction, whereas ACH payment processing fees are typically less because the transactions are dealt with in bulk batches, resulting in significantly lower costs.
Enhanced security, efficiency and low costs are just some of the key benefits that can be gained by switching to ACH payment processing, get in touch with a trusted ACH processor today for more information on the other advantages of adapting to this payment method.