ACH Processing

May 19, 2023 | Merchants | Dustin

ACH processing is a computer driven electronic network for processing transactions. ACH stands for Automated Clearing House. These ACHs batch process very large amounts of debit and credit transactions.

The value of the ACH system is based in the way these institutions process transactions. Because they process many transactions at one time, ACHs are able to charge lower fees on every transaction, saving merchants in the long run.

How does ACH processing work?

Many high risk merchants never even consider using ACH when it comes to processing payments. However, this method of payment acceptance can be extremely beneficial for both the merchant and consumer.

From the perspective of a high risk merchant, accepting payments through ACH can be a major benefit for overall revenue. Processing fees on the ACH payments are lower than standard credit card processing rates.

On the consumer side of ACH processing, the customers benefit because ACH payments are processed faster. Because of this, consumers are able to manage their finances more efficiently. This also provides an additional level of security. The purchaser is required in input their bank account information rather than just a card number, which is more secure.

ACH Processor

An ACH processor acts as a virtual terminal that a business can accept payments through. Moreover, these automated clearing house processor payments can be accepted using a smartphone, tablet or computer. As a result, that means this is a flexible and very accessible payment gateway.

For all businesses, accepting payments with ACH is particularly helpful for paying recurring bills. Customers can pay for their services directly through ACH. In other words, they set up the payment details one time using their bank account details. Therefore, the processing continues indefinitely.

ACH Check Processing

With ACH processing, funds can seemingly be transferred directly out of a purchaser’s bank account and into a business’s bank account. However, there is more than one type of ACH payment.

• ACH Credit

  When an automated clearing house uses credit, this is considered a “push.” In this ACH processing method, a consumer could set up auto-pay for a monthly bill in their bank account. So, their bank would then automatically send the business the recurring payment.

• ACH Debit Transactions

  With ACH debit, funds are directly withdrawn from a consumer’s account. As a result, a business’s bank “pulls” a monthly payment from your customer’s bank account automatically.

Free Payment Processing

All payment processing comes with some fees. There isn’t anything truly free. However, processing payments with ACH is one of the closest methods to free. Typically, ACH payment processing rates are determined one of two ways:

• Fixed Amount:
  Fixed amount fees for ACH can range anywhere from $0.20 to $1.50 per transaction.
• ACH Percentage:
  Percentage rates on ACH payments can vary. A standard rate can be from 0.5% to 1.5%.

So, in fact, these processing fees and rates are objectively low. ACH is a more profitable option, when compared to standard credit and debit card payments.

The experts at PayKings help merchants understand ACH payment processing every day. Therefore, if you are a high risk merchant looking to save money on payment rates and set up payment processing for your business, call the experienced professionals at PayKings: (727) 300-0277.