While this might sound similar to a debit card payment, the transaction is processed differently. An ACH payment is an electronic funds transfer (EFT) designed to transfer funds directly between bank accounts. This is accomplished using the Automated Clearing House (ACH) network, eliminating the need to make payments using paper checks or credit card networks. If you already accept credit cards, you may be able to use the same credit card processing company for your ACH payments. If you aren’t yet taking credit cards, spend some time researching third-party payment processing companies.
It is managed by Nacha, the organization that sets and enforces the Rules for ACH. The physical network that processes transactions is run by the ACH Operators, notably, the Federal Reserve and The Clearing House. ACH payments, in which how to accept ach payments from customers funds are drawn from a customer’s bank account over the ACH (Automated Clearing House) network, offers some distinct advantages over processing paper checks. ACH payments are not an immediate payment method like a credit card.
Downsides to ACH Payments
The ACH network is a remarkable technological system developed to make banking more efficient and secure. It benefits the lives of millions of people every day in ways we usually take for granted. The next time you get paid promptly via direct deposit or pay your utility bills online without having to write a check or lick an envelope, you can be thankful for the ACH payments network. Getting paid via direct deposit can be more convenient than being handed a paper check. With direct deposit, you know roughly when funds will hit your bank account and when they’ll be available.
Plus, ACH payments do not require any human input, but bank employees will manually complete wire transfers. ACH payments are also designed for transactions typically under $5,000, while wire transfers can be used for almost any amount. For a business owner, paying your employees by direct deposit is another example of using ACH payments.
Is ACH payment the same as wire transfer?
Just as a customer must authorize you to cash a paper check by signing it, they must also authorize you to make an ACH (eCheck) withdrawal. They can do this by signing a contract or order form or by submitting an online payment form. It works just like an old-fashioned check, except that the money is transferred between accounts electronically.
And now, with faster delivery options, new ways to pay and higher limits, these digital payment solutions can give your business even more flexibility and control. Finally, you’ll enter these details into the ACH system using the ACH provider chosen in step 2. The entire process takes three to five business days before funds clear and become available in your bank account.
The Benefits of Accepting ACH Payments
The PayJunction Virtual Terminal stores electronic signatures as well as secure checking account information. PayJunction supports ACH payments from businesses, originated as a Corporate Credit or Debit (CCD), and from consumers, originated as a Prearranged Payment and Deposit (PPD). PayJunction does not support paper check conversion done at the point of purchase (POP), in the back office (BOC), or via accounts receivable collection through the mail or a dropbox (ARC).
You can use Pay.com to receive payments via ACH, credit and debit cards, digital wallets, and more, so each customer can pay with their preferred method. It’s also highly secure, guaranteeing that you and your customers’ payment details will always stay private. Functionally, wire transfers and ACH payments processed through banks are very similar. However, ACH payments made through a third-party processor are much cheaper and more convenient than wire transfers. Many banks charge fees for both incoming and outgoing wire transfers.