Overview
ACH (Automated Clearing House) is an electronic payment network used in the United States to transfer funds directly between bank accounts. It is a convenient and cost-effective option for processing payments such as direct deposits, bill payments, and business-to-business transactions.
ACH payments are especially valuable for merchants looking to reduce processing fees and improve cash flow. Whether you're handling recurring subscriptions, invoicing, or payroll disbursements, ACH offers a reliable and secure way to move money.
What Is ACH?
ACH stands for Automated Clearing House, a network run by the National Automated Clearing House Association (NACHA). It processes direct transfers of funds between banks and is commonly used for:
- Bill payments (e.g., mortgage, utilities)
- Business-to-business payments
- Customer invoice payments submitted via online checkout or emailed invoices
Unlike credit or debit card payments, ACH transactions move funds directly between bank accounts, reducing the need for intermediaries.
Why Use ACH Payments?
ACH payments offer several benefits that make them ideal for a variety of business needs:
- Lower processing costs: ACH typically has lower fees than credit card transactions.
- Reliable funding: With proper verification, ACH reduces chargebacks and disputes.
- Recurring billing: Great for memberships, subscriptions, and rent payments.
- Convenience: Accept payments from customers without needing a physical card.
Common Use Cases for Merchants
ACH is a smart solution for many types of businesses. Here are a few examples:
- Gyms and fitness centers: Automatically collect monthly membership dues.
- Professional services: Invoice clients and receive direct bank transfers.
- Property management: Collect rent via recurring ACH payments.
- Healthcare providers: Offer patients an option to pay invoices using their bank account.
Key Definitions
- ACH: Automated Clearing House, a U.S.-based network for electronic bank transfers.
- eCheck: An ACH payment that functions like a paper check, processed electronically.
- NACHA: The National Automated Clearing House Association, the governing body that establishes rules and standards for the ACH network to ensure secure and efficient payments.
Merchant Impacts
Adding ACH as a payment option can:
- Lower your transaction fees
- Speed up your accounts receivable process
- Provide customers with more flexible payment options
- Improve customer retention with automated billing
Common Questions
Is ACH the same as a wire transfer?
No. ACH transfers are typically slower but much less expensive than wire transfers.
Do customers need to do anything special to pay via ACH?
Customers need to provide their bank routing number and account number and authorize the transaction.
Is ACH secure?
Yes. ACH is governed by NACHA rules, which include security and authorization requirements to protect merchants and customers.
Need Help?
If you have questions about getting started with ACH payments, please contact your Merchant Service Provider for assistance.