Top 6 Reasons Your Business Needs ACH* Processing

by Wayne Akey

Published on this site: November 23rd, 2005 - See more articles from this month

Almost any business, on the Net or not, can benefit from using the ACH system to electronically move money. Here are the top 6 reasons why:

1. More business.
   
   Many consumers
   
   a) do not have a credit card
   
   b) do not want to use their credit card via phone or Internet
   
   c) are at/over their credit cards limit. These consumers want to buy from you but can't. Offering a payment alternative of paying via a checking or savings account gets you more orders, customers and dollars.
   
2. Accepting checks via your web site.
   
   Everyone knows you have to accept credit cards to succeed online. The problem for many consumers is that they either don't have a credit card or are at their credit limit. The good news is that the vast majority of these consumers have a checking or savings account that you can access for payment.
   
   Using ACH processing allows you to accept payment from a checking or savings account electronically. Funds are debited from the customer and credited to the business owner. Issues such as bounced checks or closed accounts can be addressed through a combination of fraud screening and collection tools. This includes the ability to verify in real time that the account number the customer uses is valid and that there is money in the account.
   
   There are many providers. PayPal, http://www.paypal.com is perhaps the best known. There are more economical options available. The processor you elect to use should have experience, a client list and easy to use web site integration tools.
   
   ACH processing can be much less expensive than credit cards. On a typical $100 transaction you could pay 2.35% plus .30 per transaction for a total of $2.65. You pay much less for an electronic check with no discount rate. A typical per transaction fee may be .30. The reason for the drastic price difference is this:
   
   The credit card transaction once "approved" is money you are "guaranteed" to receive. An ACH transaction is a request to transfer funds from one bank account to another. The funds in most cases are available but NSF's (non-sufficient funds) are possible. Because the credit card transaction is guaranteed there is more risk for the processor and hence they charge more.
   
   Using ACH processing can also save a great deal of money if you receive an NSF (non-sufficient funds) check. Depending on what your bank currently charges you can save 90% or more. An ACH Processor may charge $1.00 to $2.00 per NSF while many banks today charge up to $30 for an NSF paper check.
   
3. Accepting checks via phone.
   
   NACHA ( http://www.nacha.org ) the governing body of electronic transactions now allows a business to electronically debit a consumers account for payment taken by phone. Similar savings to web transactions are possible. You can offer a new payment vehicle to your customers and cut costs. Verification services can reduce fraud or bad account info and the charge back window compared to credit cards is shorter.
   
4. Recurring payments.
   
   If your site collects a monthly fee from consumers or businesses and you only use credit cards you are both paying too much and losing a significant percentage of users who would pay electronically via ACH.
   
5. Electronic pay-outs.
   
   If you pay affiliates by mailing checks you could be electronically crediting their account. No postage or invoice costs. Automation of payments is possible.
   
   You can also pay employees and vendors via ACH.
   
6. Processing mailed payments.
   
   Your bank probably charges between $10-$20 for returned checks. You can convert these paper checks to electronic transactions and get your money faster, avoid expensive returns and trips to your bank.

These are 6 solid reasons your business needs ACH processing. The bottom line is that it can save you time and money while offering customers a payment alternative.

Partner with a reputable ACH processor and you can enjoy the multiple benefits of ACH payment processing. These include reduced costs and time as well as automating manual tasks.

*ACH refers to the Automated Clearing House and generically means money moves electronically.

Wayne Akey of http://www.ACH-Payments.com has helped numerous businesses save time and money with ACH processing. Visit www.ach-payments.com for a limited time FREE set up (mention the article)