ACH payment processing offers a wide range of benefits for businesses over alternative, non-electronic methods of payment, particularly paper checks, and are also typically far more cost effective to process than credit cards.
The benefits that ACH processing offers companies includes an increase likeliness of getting paid, being paid quicker, particularly for companies who are using ACH for processing recurring payments, such as loan repayments, monthly bills or other subscription-based product or service, all with transaction fees that are typically lower than many other forms of payment. There are also benefits for your customers when utilizing ACH payments, such as the increased convenience of them and safety of them when compared to other payment methods.
Besides their being a more cost-effective, efficient means of payment over paper-based checks, they can also help to expand your customer base, giving the 10 million consumers throughout the US who don’t have a credit card access to your products and services, which they otherwise wouldn’t have.
The main benefits of ACH payment processing include:
Around 9 million Americans suffer at the hands of identity thieves each year, according to the Federal Trade Commission. The leading cause of identity theft, according to the NACHA, is the ease with which financial information can potentially be obtained from paper-based checks, bank statements and credit card bills, all of which are more often than not disposed of by consumers without them taking proper measures to ensure the safety of their personal information before doing so.
ACH payments can help mitigate the risk of identity theft that can be associated with paper checks. This is due to the fact that all transactions occur both automatically and electronically, significantly reducing the number of individuals who are able to access the personal or financial information of your customers. ACH transactions also can’t be lost in the mail, stolen or misplaced, as paper-based checks can, further reducing the range of problems that could potentially delay the successful processing of a check.
Unlike paper-based checks which can often take as long as 5 business days to clear before they are accessible when deposited into a bank account, funds that are processed as ACH payments can be accessible to account holders considerably faster, without these delays.
With ACH, it’s only necessary to obtain authorization once, before processing the first transaction, to setup a recurring payment as NACHA’s rules don’t require further authorization. This is especially true when it comes to direct deposit payroll checks, as crediting these directly to your employee’s accounts will be far more convenient for them as there will be no need for them to physically pick up their check or go to the bank to deposit or cash it. In cases like this, ACH payments will also remove the need for any special arrangements to be made in order to pay employees who are on leave, away from the office or working from a location other than their usual place of work for extended periods of time.
All transactions are not equal. This is particularly true when it comes to ACH payments, as banks will tend to give priority to electronic checks over paper-based ones. This makes it far more likely that you’ll be paid, even if a customer doesn’t have enough funds to cover multiple payments that are being made from their account at the same time, as banks are far more likely to bounce paper checks than they are to decline an ACH payment in such a circumstance. This isn’t always the case, as it does depend on the bank, however it’s often more likely than not the case.
ACH payments have a limited number of dispute reasons. These reasons are a transaction being for an amount different to what has be authorized or was processed before the date of authorization or before proper authorization was sought in the first place. This makes ACH payments more reliable as a means of recurrent billing than many other alternatives, such as credit or debit cards, typically settle faster, as banks then to release funds quicker with ACH payments than with other methods due to the lower rates of dispute and fraud of ACH payments.
One of the main advantages of ACH payments are their lower processing costs when compared to alternative payment methods, such as credit/debit cards, which can carry fees somewhere between 1% and 4%. The reason for these reduced costs is that ACH payments are processed in batches, which works to keep transactional costs down.
If you’re interested in learning more about the full range of benefits that come with ACH processing from Transact24, how our solution works, and what it can do for you and your business, please get in contact with us.
You can contact us either by email, or by using the form provided on our contact us page. Once we receive your message a member of our ACH processing team will respond to you within 24-48 hours to assist you in learning more and moving ahead with our ACH processing solution.