Handling ACH Payments

Handling ACH payments is critical to many businesses. It allows you to accept payment securely as funds transfer directly from your customer's bank account into yours. There are a variety of ACH transactions that your business can choose from, and there is some risk for fraud your business should be aware of. While ACH is slower than credit cards or wire transfers, you can spend a lot less on fees. 

Fundamentals of ACH

ACH allows for electronic bank-to-bank transfers. ACH is overseen by the National Automated Clearing House Association (NACHA). Thousands of financial institutions compose the ACH network. 

This type of transaction is used frequently for payroll allowing employers to quickly and easily pay their staff. In addition, however, you can use this tool to allow your customers to pay you. 

To start the process, the originator initiates an ACH payment with their bank, and this goes through one of two ACH operators, FedACH and EPN. Then, after sorting through batches of transactions, the operator transfers the funds to the recipient's bank.

According to NACHA rules, debit transactions will be processed in one day, and credit ones in one to two days. But in practice, you may take several days to access the funds. Credit card processing takes 2-3 days to process, while ACH takes 3-5 days.  

Fees for ACH transfers range from 20 cents to $1.50 or 0.5% to 1.5%. Credit card processing fees typically start at 1.5% per transaction. Unlike credit card transactions, you are not guaranteed funds as an ACH is a fund request, and the transactions may be returned if there are insufficient funds in the sender's account. 

How to Begin Handling ACH Payments

There are two methods to begin handling ACH payments. First, you can accept ACH payments through your bank if you have a business checking account. Or you can have your payment processor enable your customers to pay you with ACH payments. 

While you can accept payments yourself with your business checking account, a payment processor can make the process faster and easier for you in exchange for a fee. 

Once you choose your payment processor and have them set up ACH payments for you, you will need to ensure you know how to pull funds from your customer through your processor. From there, to actually process ACH transactions, your customer can input their payment information into a payment gateway, or you can share your routing information with them. 

Types of ACH Transactions

There are several types of ACH transactions. Debit transactions are when funds are pulled from a customer account by your bank. Credit transactions occur when their bank automatically pushes the funds to your bank, and you are charged a small fee. 

Additionally, there are pre arranged payments and deposits (PPD), telephone-initiated entry (TEL), and web-initiated entry (WEB). Therefore, you must be familiar with the types of ACH payments that best suit your business model. 

Benefits of ACH transactions

With ACH payments, you can improve your customer's experience by adding another layer of convenience. This is an especially valuable tool if you are already handling extensive invoicing with your clients. 

ACH payments are very easy to set up either with your business checking account or payment processor. They can also be incredibly secure as customers can send you funds without disclosing their bank information. You also can allow your customers to use ACH for recurring payments if they want. 

They are easy to use as you will not have to contact your bank to initiate a transaction. Instead, it can be done automatically online.

Limits of ACH

Handling ACH payments is very similar to wire transfers but less expensive. The trade-off is that handling ACH transfers take more time to clear than wire transfers. Because of this, if you need access to funds right away, you are probably better off with wire transfers. At the same time, credit card processing takes 2-3 days to process, while ACH takes 3-5 days.  

Fees for ACH transfers range from 20 cents to $1.50 or 0.5% to 1.5%. Credit card processing fees typically start at 1.5% per transaction. Unlike credit card transactions, you are not guaranteed funds as an ACH is a fund request, and the transactions may be returned if there are insufficient funds in the sender's account. 

Handling the Risk of Fraud

ACH payments lack some of the additional security features of credit cards, such as CVVs and billing addresses. Dozens of different return codes will reverse an ACH payment. Fortunately for you, banks are very strict in allowing for ACH returns. This is critical as merchants are unable to dispute fraud, unlike the chargeback process with credit card transactions. 

When a customer claims fraud with an ACH transaction, your best course of handling the problem is to contact them directly. This saves you money and shows your customers that you want to help. If you notice someone is consistently committing fraud against you, handling it on your own can be difficult. You can hire an attorney to send them a warning letter to get them back or bring a lawsuit against them. 

To avoid ACH returns, communicate clearly with customers and provide assistance with questions about payment details. You also should ensure your company name and contact information is included in the transaction description your customer sees. This way, they can recognize the purchase and contact you directly if there is an issue. You also can send email and text reminders when the payment is upcoming. 

Handling ACH with Treati

If you are looking for a payment processor that can handle ACH payments for your company, Treati is ready to help. We are happy to provide you with a customized solution that emphasizes convenience for your customers and security for your business. Providing a smooth payment experience for both you and your customers is essential to us. 

We also offer competitive pricing to allow you to make the most from handling ACH transactions. All you have to do is pay $20 a month and 20 cents per transaction. This allows you to keep as much of the profits as possible for your business. In addition, our customer support team is always available to help your team sort out any issues with your payment gateway and handle ACH payments.