We’re all familiar with credit card, check and cash payments. But these aren’t your only payment options, especially when it comes to recurring billing.
ACH payments are electronic payments made through the Automated Clearing House (ACH) network that allow people to directly transfer money between two bank accounts. A popular alternative to checks, they’re typically used for monthly bills, subscriptions, direct deposit payroll, invoices and other types of recurring payments.
But ACH payments have a lot more to offer than just simplifying invoicing and recurring billing. When implemented correctly, ACH payments can impact your business for the better.
1. Lower Costs
Although processing fees vary, businesses can end up spending about $1.22 to process checks and 1.9%-2% of the transaction to process credit cards. These are fees may seem small, but as every business owner knows, they add up in the long-run. On the other hand, ACH payments cost about $0.55 per transaction, meaning that ACH transactions typically have the lowest of fees of any payment method.
2. Increased Security
To process ACH payments, customers will need to provide a bank account number, which is then entered into a secure system and encrypted. This is the exact same information that is provided when customers pay with paper checks. But checks differ from ACH in that they are passed through multiple hands and run the risk of being left out in unsecure areas. This is a risk that’s removed when funds are transferred electronically – there’s less opportunity for fraud.
3. Greater Efficiency
When you accept ACH payments, you can bid au revoir to paper invoices, paper checks, mailing expenses and trips to the bank. ACH systems can also automate invoicing, payment and payment tracking, giving you the peace of mind that all of your payments and billing are taken care of on time, every time. Not only does this save you time, money and streamline operations, but it also eliminates the risk of human error from the process.
4. Faster Processing Time
The great thing about ACH payments is that banks typically process them first, so you’re more likely to get paid than you would be if you were using paper checks. Furthermore, ACH transactions can only be disputed for three reasons: 1.) It was not for the exact amount authorized, 2.) It was processed earlier than the authorization date and 3.) It was not authorized at all. Credit cards, however, can be disputed for a variety of different reasons. In addition, since credit cards have a higher non-payment rate, banks will sometimes hold the funds for days or weeks. ACH payments generally get quicker access to funds.
If you’d like to learn more how Eliot can help you take ACH payments, contact us here.