Every day, billions of dollars flow through the ACH network. Unlike paper checks, which can get lost in the mail or stolen and require a lengthy reconciliation process, ACH payments are secure and trackable.
Streaming services, software-as-a-service providers, and membership-based organizations often use ACH to collect recurring payments from their customers. This payment method saves businesses time and money and provides customers a seamless experience.
Whether it’s your monthly utility bill or your direct deposit from your employer, chances are you’ve used an ACH payment transaction in the past. ACH is an automated way for banks to debit, credit, and transfer money between one another. It is regulated by NACHA (National Automated Clearing House Association).
Many consumers have grown to expect the ability to move funds electronically. They use ACH for peer-to-peer payments with apps like Venmo and when they fund their financial accounts through their digital wallets or other providers.
Adding ACH to your business’s payment options can provide a more convenient experience for your customers. They’ll no longer need to search for their checkbook or spend time writing checks. You’ll also reduce the amount of payment churn from lost or expired credit cards. And you’ll save on paper invoices and checks, reducing your postage, ink, transportation, and labor costs.
Recurring payments help stabilize cash flow, making it easier for businesses to budget and forecast. They also reduce the risk of customer churn that results from missed payments, such as a failed utility payment or late fees for subscription services.
Adding recurring payments is one of the easiest ways to automate billing and collections processes. This frees staff to focus on more important work and ensures payments are collected as scheduled, eliminating the stress of dealing with late payments or lost revenue.
For customers, ACH payments offer a simple way to pay for goods and services. Instead of reentering payment information every time they purchase or setting reminders to remember their monthly bills, they can log in to their bank account online and pay. Plus, since ACH debits are pulled from a customer’s bank account directly, there are fewer chances for mistakes or issues that may lead to declines with credit cards. This also makes the process more convenient for consumers, who don’t need to search for their checkbook or worry about losing it.
When invoicing, processing payments, and recording financial transactions are all done through one system, it can help with efficiency. That’s because there’s less chance of a mistake or miscommunication, and it can be easier to keep records organized. Streamlined payments can also help save businesses money. For example, credit card transactions often incur 2.5% of the total transaction amount in fees, while ACH payments usually only have a flat fee ranging from $.20-$1.50 per transaction.
Moreover, with ACH payments, customers can automatically set up recurring payments. This eliminates the need for your business to constantly chase late payments or remind customers to pay their bills, which can be costly and lead to customer churn. Additionally, since ACH payments come directly from the bank account, they have much lower failure rates than credit cards (which can expire or get lost). These reduced costs, combined with improved cash flow, frees up time and resources that can be better spent on other aspects of your business. This ultimately leads to a more productive and successful business.
Unlike credit card payments, which often have fees for each transaction, ACH transactions typically cost less. They also save consumers money by not having to travel to the bank to deposit a paycheck or buy stamps and envelopes for bill payment.
Adding ACH to your payment flow is a great way to provide customers with a better customer experience. Whether offering recurring subscription payments, funding new accounts, or accepting one-time payments, the right ACH onboarding and payment processing solution can help you convert more customers with minimal friction.
Rather than requiring your customers to locate their checkbooks and send you a physical copy of their account information, a modern authorization solution uses instant account authentication to reduce onboarding time and increase security for ACH transactions. Similarly, a business can avoid the risk of human errors, which cost companies more than you might think. According to IBM Security, human errors account for 23% of data breaches. Using ACH can help you save on the costs of these mistakes, including lost revenue and labor.
The ACH network helps businesses save time by automating payments. This reduces the chance of human error and eliminates the need for manual deposit processing, which is costly and frustrating. It also eliminates the need for paper checks, resulting in cost savings on items like envelopes and stamps.
Moreover, ACH payments can be made one-time or recurring, making them a convenient option for consumers and businesses. For example, consumers can set up recurring ACH debit transactions so that they don’t have to remember their bills every month. Similarly, businesses can automatically take money from a consumer’s bank account each month by requesting their ACH account information and sending them an ACH request to complete the transaction.
Lastly, ACH payments are more secure than other payment methods. This is because ACH transfers send private banking data directly between two parties without any middlemen to intercept the information. In addition, ACH solutions instant account authentication verify a customer’s bank accounts in real time. This prevents fraudulent activity and ensures that only valid transactions are processed.