ACH, or Automated Clear House, is an electronic network that allows the transfer of funds between two bank accounts. With ACH offering businesses multiple benefits such as helping them save money and offering additional protection against disputes, many businesses are incorporating ACH into their own payment processes.
During the fourth quarter of 2020, ACH payments saw an increase of 8.9% with over 7 billion payments being made on the ACH network. Within that same time period, consumer ACH payments for bills and other recurring payments grew by 15%.
With a year-to-year increase in use, the data shows a subtle, but continual, shift in customer spending habits that favor ACH payments—meaning businesses should be taking advantage and incorporating ACH alongside its numerous benefits.
The Benefits of ACH Payments for Businesses
We’ll be exploring the four main benefits of incorporating ACH payments into your business’s operations.
1. Lower Payment Processing Costs
If you’re already accepting debit and credit card payments, then your business is well aware of the frustrating processing fees that payment processors charge. These fees are often percentage-based, meaning the higher the payment, the higher the processing fee your business will be charged.
In comparison, ACH payment processing fees are often flat rates, which can range anywhere from $0.25 to $1.50. For businesses that routinely process payments, especially large or recurring payments, this helps to ensure that revenue is kept in-house, instead of handing it over to credit card companies.
While there are no payment methods that are entirely foolproof, technological advancements continue to strengthen digital security measures that make ACH payments more secure and less susceptible to issues such as chargebacks.
When it comes to traditional card payments, it is easy for customers to dispute a charge on their card with a simple click, and businesses are often unaware that a dispute has been started against them, which can result in unexpected losses.
Though paper checks may seem like a safe way to pay in person, there is nothing that prevents a customer from writing a check for an amount they do not actually have.
Fortunately, with ACH, payments are entirely electronic meaning they will never be lost in the mail and can be processed faster than paper checks. Furthermore, the dispute process for ACH payments is harder and more stringent, which leads to fewer chargebacks and disputes.
3. Recurring Payments
ACH payments are a great option for businesses that process multiple recurring payments on a monthly basis. Businesses that regularly bill their customers fall victim to the processing fees traditional processors charge per payment, and if payments occur on a monthly basis, businesses get trapped into continually paying simply for receiving the money they’re owed. Additionally, customers can easily forget to pay their bills on time, resulting in unpaid invoices and problems with cash flow.
ACH payments address and solve these two issues. With ACH payments being the most cost-effective payment method (often only charging a low flat fee) they provide businesses with the opportunity to save on their processing fees. Such savings can then have a favorable effect on a business’s bottom line.
With ACH payments being linked to a bank account, customers can easily enroll in automatic payments, which helps to eliminate any issues related to customers forgetting to pay their bills. Furthermore, credit and debit cards can easily be lost or changed, whereas it’s unlikely that a customer’s bank account will close unexpectedly.
Electronic payments reduce the number of human errors because there is limited human interaction with the actual payments, unlike physical checks. Any form of payment error can have critical ramifications for both businesses and their customers, and fixing errors also result in lost time.
With ACH limiting the amount of physical handling that goes into payments, error rates are significantly reduced. With fewer errors or none, time that would previously be spent fixing errors can then be put towards more important tasks.
How To Begin Accepting ACH Payments
With ACH payments offering businesses a multitude of benefits, it’s clear to see why businesses should incorporate ACH payments into their payment processing. However, traditional payment processors often require businesses to pay subscription fees or require additional equipment to install.
For businesses looking to begin accepting ACH payments with no such fees, Denefits is the perfect option.
With Denefits no-fee payment processing, business owners can process one-time recurring payments for their customers using ACH. Denefits makes ACH payment processing easy: there are no subscription fees to pay or any additional equipment to install, so your business can begin accepting ACH payments right away. Avoid paying pesky credit card processing fees by using Denefits to simplify your payments.
No matter what industry your business is in, ACH payments will help improve your payment processing. From offering businesses the chance to save money on processing fees, to streamlining the overall payment process, ACH payments are a critical component for efficiently accepting payments.