If you own a small business, you’ve probably had discussions and meetings about whether to purchase or rent equipment, lease or buy office space, create an in-house marketing department or subcontract the entire chore, and many other decisions. But it’s unlikely you’d ever need to debate the pros and cons of using an ACH payment system.
ACH payments are a convenient, safe, fast way to accept or deliver funds. This is true whether you’re a small business owner, an individual, or a large company. If you’ve been wondering whether it’s time to add this convenient form of money transfer to your list of financial capabilities, it’s important to know three things: what ACH is, what its advantages are, and what some of the common misconceptions are.
What is an ACH Transfer?
What are ACH funds transfers? Simply put, ACH payments are super-low fee, electronic methods for transferring funds from one bank to another. You’ve probably paid utility or other kinds of personal bills with them and seen the detail on your bank statement with wording like “ACH payment for …” in the detailed listing of transactions.
The letters stand for the Automated Clearing House Network, a system banks and other financial entities use to do daily batch processing of transactions. In addition to being extremely secure, they’re also reliable, relatively fast, and cost far less than credit card transactions. That last reason is the main incentive for small, medium, and large companies to use them.
Individuals use the ACH network millions of times per day as a way to settle utility, vehicle, mortgage, medical, and other routine personal financial obligations. But every now and then, small business owners and entrepreneurs assume it’s just too problematic to add this automated form of funds transfer to their list of payment and receipt options. Nothing could be further from the truth.
In fact, when companies opt to use a service that offers a fast, low-cost, convenient, ACH API, they can be up and running in a matter of minutes and join the millions of medium-sized and larger commercial enterprises that use ACH for paying bills and receiving funds. API stands for “application program interface.” These kinds of programs allow service providers to offer seamless, simply ways to use complex computer applications like ACH payments, for one.
Benefits of Using an ACH API
What types of benefits do business owners receive when they are able to accept ACH payments from their customers? The list is a long one, but the most common advantages include the following:
- Speed: Because ACH transactions are done in huge batches several times per day, you never have to wait very long to receive funds from a paying customer. In most cases, merchants see the money in their own accounts within 24 hours of when a customer clicks the “pay” button.
- Communication: When something goes amiss, both the payer and receiver are notified in a timely fashion and can work out the details of resolving the situation. Sometimes a customer’s bank account number was entered incorrectly or the customer forgot to put enough money into a checking account. Whatever the snafu, the ACH system provides quick resolution resources for both sides of every transaction.
- Confirmation: Because payments are verified on both ends of the bank transaction, both the recipient and sender provide solid confirmation that a payment has initiated, gone through, and settled. There’s never any doubt about a completed transaction when you use the ACH system.
- Cost: Compared to the other two most common forms of payment, ACH is by far the lowest-cost method. Paper checks and credit cards rack up per-transaction fees of about $1.20 and $10, respectively for a typical $500 transaction. Compare that to ACH fees of about 50 cents for the same size payment.
- Easy Recurring Billing: Where ACH functionality really shines is in the area of recurring payments. If you have customers who pay monthly, weekly, or in any other structured way, ACH was designed for their needs as payers and yours as a recipient.
- The Power of API: It can be tricky for website owners to set up ACH payment programs and infrastructure themselves. That’s where APIs come in. A service provider can offer owners a quick and easy app to interface with the massive ACH network and get payments processed as quickly as possible without the need to write special code or do behind-the-scenes programming work.
Fact and Fiction about ACH Payments
Like everything else, there are several misconceptions floating around out there about ACH payments, what they are, how they’re used, and related topics. One reason for many of the myths is that the ACH payment network has been around for a very long time, since the late 1960s, in fact. It was created as a way for banks to send money to each other but has grown to include functionality for much else. Here’s the lowdown on what the most common myths are, along with the truth about each topic:
- Myth- They take four days Once upon a time, more than 10 years ago, some ACH payments took between three and four days to completely process, from beginning to end. All that changed when banks and their processing networks began upgrading everything several years ago. Nowadays, the typical start-to-finish timing is about 24 hours for the typical ACH transfer of funds between a paying customer and a business merchant.
- Myth- ACH is just debit-card processing: The fact is that debit card transfers rely on a completely different network, the same one that processes credit cards. ACH transfers are done on a bank-to-bank network that never includes debit cards or any other forms of payment.
- Myth- Merchants can take money from customer bank accounts at any time: Sadly, this is one of the most common misconceptions about ACH payments. The truth is that customers must explicitly approve payments. Of course, as is the case with many recurring forms of payment, customers can authorize regular withdrawals. But in no case can businesses simply swoop in and take funds from a customer’s bank account for no reason or without authorization.
Let an ACH API Work For You
No matter how small or large your company is, and no matter what product or service line you specialize in, an ACH API can make your life a lot easier. At Metro Payment Technologies, we offer a complete range of business solutions for entrepreneurs and business owners of all sizes and shapes. One of our most popular ones is getting our clients set up to accept and receive ACH transfers without delay.
If you want to know more details about how Metro Payment Technologies can get your ACH functionality up and running asap, check out our information page on the topic by clicking here. In short, once you’re set up with the API, you’ll be able to not only send and receive ACH payments seamlessly, you’ll also have the capability to accept hard-copy checks from customers should you choose to do so. That’s because paper checks are nothing more than ACH-enabled instruments that allow individuals to authorize withdrawals from their personal accounts.
At Metro Payment Technologies, we’re proud to offer our customers a full line of business-related products like payment terminals, gateways/virtual terminals, e-commerce solutions, POS systems, wireless terminals, e-check processing, and ACH APIs. Our services include helpful, profit-focused choices like PCI compliance, customer support, payroll, chargeback retrieval/handling, merchant cash advances, leasing, and many more.