ACH Processing: Should You Set It Up or Not?


ACH or automatic clearing house (ACH) processing is a method for completely computer-based processing transactions. It has several key benefits that make it a rather attractive system:

  • It supports direct debits
  • Uses credit transfers
  • Many participating financial institutions use it
  • Provides low domestic value payments

ACH payments always go through an ACH network, which adds a layer of security for your transactions. If you want to set up ACH processing, then you ought to know several key factors that will be included in the process; this will help you decide whether it is right for your business or not.

Lower Transaction Fees

This is one of the key highlights that make ACH payments, billing, and crediting very attractive. Compared to other debit and credit processors, ACH charges you with lower transaction fees. Some processors may even just charge you a flat fee.

Take note that at times a larger transaction ticket may get you bigger savings. For example, credit card companies may charge $2.5 for a $100 transaction, but an ACH processor will only charge you 60 cents for the same. Sometimes that is enough to convince people to sign up.

Processing Times

This may be a downside of several ACH processing companies but for a good reason. This factor will make you think about the potential pros and cons of customer convenience versus your savings.

It usually takes two to three days for credit card companies to process billing and other similar transactions. Of course, the processing times will vary depending on the type of credit card that is used.

However, take note that ACH transactions may take as much as three to five days to process transactions. Nevertheless, remember that banks often prefer ACH transactions rather than paper checks and other instruments to ensure the availability of funds.

There are ACH providers that offer same-day funding, which will help improve customer satisfaction. Make sure to inquire about this feature, especially if you are a high-risk business.

Different Customer Support Providers May Confuse Your Customers

When you set up ACH processing, remember that you will have to provide a different customer support team to handle complaints and inquiries. However, the money always comes out of the customer’s bank account when transactions are processed.

However, a different team will handle credit card transactions, and a totally different team will handle ACH transactions. No team can access the data and information across the two different systems.

One solution to help you get over this ordeal is to hire a third party software provider for ACH processing. Not only do they provide you with the software, but they usually provide you with a customer service team as well.

Transaction Fees are Debited Separately

A different merchant account is needed for ACH transactions. A different provider, apart from the bank/credit card company, will also be required in some setups. This detail means the gateway costs and the transaction fees will be debited separately.

Watch Out for NSF Returns

It may come as a surprise, but ACH transactions are still prone to NSF returns. One way to avoid this problem is to offer ACH processing only to select trusted customers.

Consider these factors in case you’re looking to include ACH into your portfolio. Some customers will appreciate this feature and will increase customer loyalty. However, there are drawbacks that you have to watch out for and be aware of. Choose the right customers to whom you will provide this extra service offering.