4 Benefits of ACH Processing

The ACH processing network connects financial institutions throughout the U.S. Overseen by the regulatory agency, NACHA, this network supports the seamless transfer of funds in and out of bank accounts. As the costs of accepting physical checks is rising, business owners are looking for ways to run their companies more efficiently. Many businesses are turning to ACH processing to expand their customer base and increase their revenues. In this article, you'll discover 4 benefits of using ACH processing for your business.

#1 - Faster Access To Funds

Often, merchant banks will not release funds from credit and debit card transactions for several days or weeks. They want to protect themselves from the risk of not getting paid. That is, if they release the funds to the merchant prior to receiving them from the issuing bank, the transaction could later be denied. ACH processing is much quicker. Funds are often available within 1 or 2 days because the funds clear through the network more quickly.

#2 - More Convenient

Any business owner who has accepted checks for purchases knows how inconvenient they are. Customers forget to sign the checks, leaving employees responsible for double checking the information. The checks can easily become lost. Plus, a merchant must endorse the checks and then travel to the bank to deposit them. Often, checks bounce and merchants are forced to pay extra fees. All of these things take time. By contrast, ACH processing precludes the use of checks. The money for a purchase can be debited directly from a customer's checking account. It is much more convenient, saving time and money.

#3 - Cost Effective

Many merchant accounts and third party payment processors charge high fees for each transaction. What's more, the fees increase with the size of the transaction. In other words, the fees that a merchant will pay to process a large purchase will be more than those applied to small purchases. By contrast, the fees that are applied for each ACH transaction are fixed, regardless of transaction size. While a large purchase that is processed through a merchant account may cost several dollars in fees, an ACH transaction will typically cost less than $.50.

#4 - Easy Recurring Payments

There are millions of businesses which charge customers' credit cards monthly or annually. For example, newsletter publishers, book and music clubs, and health food companies often levy monthly membership fees. Aside from a few administrative tasks, the recurring billing is automated. By setting up the billing through the ACH network, the recurring payments can be received more quickly for a lower cost.

Is ACH Processing The Right Solution?

Most businesses will find the benefits offered by ACH processing valuable. The faster access to funds can be critical to business owners who need cash flow to maintain daily operations. The increased convenience of eliminating checks can save an enormous amount of time. The lower transaction fees are reflected in the bottom line. And the ACH network's ability to support recurring payments make it an attractive solution.

One potential drawback is that the ACH network only connects financial institutions in the U.S. If you conduct the majority of your business in other countries, ACH processing may not be appropriate for you. That being said, if your business is focused primarily in the U.S., consider using a merchant account that allows you to integrate ACH transaction processing. You can enjoy the benefits of both solutions, taking advantage of each as circumstances allow.

This article is brought to you by PaySimple, a leading provider of merchant account services.