While cash is considered king, credit and debit cards have followed closely behind as other popular methods of payment. With the popular use of traditional credit and debit cards, why is it that businesses are exploring other methods for payment processing? It’s because traditional credit and debit cards have a big drawback—high processing costs with each and every transaction.
This is where an Automated Clearing House (ACH) transfer can help. Below we list some of the main reasons ACH can be a more convenient and superior payment option for business:
The average time for a check payment to clear is five to six business days, whereas an ACH payment processing can be completed in half that time. Even better, NACHA (National Automated Clearing House) has recently approved an operating rule that will allow same-day ACH transfers a reality. Saving time with ACH payments can improve workflow efficiency, payment flexibility, and of course, quicker access to funds.
Checks are vulnerable to signature forgery as well as simple misplacement. ACH mitigates these issues—transfers are direct, eliminating intermediaries and reducing additional opportunities for fraud. ACH’s payment processors carry out two-way micro-verification of each parties’ authenticity. This ensures the account information provided is accurate and that there are no blocks on the account, which prevents bounced checks and incomplete payments.
Using an ACH processor benefit both the payer and the business in each transaction. For the payers, they no longer have to carry around checkbooks, plus they can have the flexibility of one-time payments or recurring payments. For businesses, ACH transfers (which take place between two bank accounts) save them the troubleof payment failures due to a payer’s card expiring.
Great for Recurring Bills
While all businesses can benefit from ACH, those following a subscription model can utilize the added benefit of recurring billing. Aside from using prepaid card, ACH is also great for recurring billing reduces monthly processing, which in turn significantly reduces associated transactional fees, saving your business money.
Of course, increased convenience and security are great perks, but one of the biggest reasons businesses switch to ACH is its lower transaction fees. On average, both checks and credit cards carry higher costs than ACH transfers due to their associated administrative procedures, including authorization, payment initiation, printing, signing, mailing, and time. Because ACH simply transfers funds between two banks through a clearing house, the transactions costs are much lower and much more appealing.
Now that you know why business are switching to ACH transfers, it’s time for your business to benefit as well. Stop cutting checks and switch to ACH payment processing—it’s not only a smarter way to deal with financial transactions, but also user-friendly and easy to implement for all business types.