The Automated Clearing House (ACH) network allows you to electronically send and receive payments that are automatically linked to both parties' bank accounts.
Most commonly used for direct deposit payroll, loan repayments and online bills, ACH transactions offer important advantages over traditional payment methods such as checks and debit cards:
- Checks can take weeks to clear, once you factor in travel time and processing delays. By contrast, ACH payments post within a few days.
- ACH transactions also are cheaper. A $500 transaction might generate fees of only 60 cents. However, most credit cards carry merchant fees ranging from 2 percent to 5 percent, which translates to $10 to $25 for a $500 transaction. Meanwhile, the hidden costs associated with check processing can set you back anywhere from $4 to $20.
It's possible to amplify these ACH benefits if you select a processor that has direct connections with reputable banks. For both parties:
- Setting up an ACH relationship is much easier.
- All transactions post more quickly.
- The processing fees are sometimes lower.
What Types of Businesses Benefit Most from Direct ACH Connections
Anyone who wants to send or receive money through the ACH network should consider exploring processors with direct connections, especially small businesses that need to reign in costs.
However, direct ACH connections also appeal to businesses that:
- Handle high-volume or big-ticket transactions. Although the fees are low, they can quickly add up over time.
- Struggle with cash flow. Given the shorter processing times, direct ACH connections allow you to receive funds more quickly.
- Want to reduce their carbon footprints. All transactions happen electronically, so you can eliminate reliance on paper, postage and other materials.
- Want to avoid PCI compliance hassles. ACH payments don't use credit cards, so they don't fall under PCI guidelines. This can be especially useful if a large percentage of your customers don’t have access to consumer plastic.
- Want to take advantage of recurring billing (or recurring payments in the case of direct deposit).
Although these benefits naturally appeal to most businesses, ACH payments aren't for everybody. In order to set up a connection, both parties must provide their banking details. And there will always be some customers who aren't comfortable sharing that information with others.
In addition, ACH payments don't come with the same fraud liability protection that many credit cards provide. Although the network is highly secure, your bank won’t necessarily compensate you for any fraudulent losses.
BluePay's Approach to ACH Payment Processing
At BluePay, we provide ACH processing with connections to some of the biggest banks in the industry. We have working relationships with nine major financial institutions:
- Wells Fargo
- Capital One
- ACB Bank
- Bank of America
- U.S. Bank
- MB Financial
- J.P. Morgan Chase
If your bank isn’t on this list yet, don’t worry. We still provide traditional ACH payment processing for smaller institutions, and we continue to add new direct connection partners to our growing network.
To learn more about our ACH payment gateway solutions, contact our support team today.