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Automated Clearing House (ACH) payment allows for an institution to directly charge a client’s credit or debit account. The account can be set up for single or recurring billing on the part of the institution. Transactions like these are often done electronically and with the client’s permission.

What are some common uses of ACH?

  • Online billing software
  • Direct deposit
  • Vendor payments
  • Mortgage repayment
  • Loan repayment
  • Person to person (P2P) payment
  • Business to customer (B2C) payment
  • Business to business (B2B) payment
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Why should my business use this?

ACH payments are cheaper than credit card processing.

While businesses need to have credit card processing to help customers with recurring billing, ACH payments are cheaper. Credit card processing requires more supervision. This requires fees to justify labor costs.

ACH uses a simpler system for online invoicing and gets payment straight from the client. While fees can be negligible in the short term, the prices can add up in the long run.

Accepting paper checks takes more time than ACH payment.

Paper checks are physical, which means they need to be in your bank’s hands to get processed. This requires transit, which takes time. ACH gets rid of transit and gets the payment to the bank as soon as possible.

The only limits are the processing time for the payment via different vendors. This focuses the pay window down, making each dollar resonate that much more in your invoicing software.

ACH gives you more information.

Paper checks can lack information that your financial team needs. ACH payments have electronically coded information on each transaction. This information can tell you the time, date, and other info you need to balance your books.

Connect your ACH with any invoicing software or online invoicing to get the most out of your payments.

How much does each transaction cost my business?

While the amount is greatly reduced, the fee varies between institutions. Authorized Credit Card Systems will work with you to find the right kind of ACH service for your needs.

Many ACH services boast of a flat fee structure ranging from $0.11-$0.55 per transaction. Again, the fee structures can vary. However, ACH is a great asset for secure, reliable payment without high overhead.

How does ACH payment work?

To set up this payment method, the client will give you authorization. From there, you can access any funds right from the customer’s account. When the time comes to withdraw funds, the Originating Depository Financial Institution (ODFI), takes over. The ODFI, also known as a moderating bank, takes funds from the client’s account and sends it to an ACH Operator.

The ACH Operator batches transactions together for your business. They then parse them out in convenient lump sums. The Operator will send this to a Receiving Depository Financial Institution (RDFI) . The RDFI will finish the transaction, bill the amount from the client, then give it to your business.

The process happens in just one to two business days. For direct debit transactions, it takes one business day. Credit card transactions can take longer than this. If it takes longer for these payments to show up in your billing software, contact Authorized Credit Card Systems for more information.

The ODFI, also known as a moderating bank, takes funds from the client's account and sends it to an ACH Operator.

Ready to get started?

Contact our company for a free consultation. We will advise you on how to go forward with your processing systems and show you the best options available.