Benefits of ACH Payment Processing for Auto Warranty Merchants
ACH is the lowest cost method of accepting payments. ACH debits payments from bank accounts and settle the funds to your bank account. This is like the way debit cards work.
Because there are no “interchange” fees associated with ACH like there are with card payments, rates for ACH processing at least 50% lower than card processing. Therefore, your cost of sales is lower when customers opt to pay via ACH, which is a pro for the payment method.
The primary benefit of accepting ACH rather than debit cards, especially for recurring billing, is that ACH is more stable than cards. Bank account numbers rarely change since consumers seldom change bank accounts. Therefore, there is no need up update payment data & recurring billing continues uninterrupted.
Compare this with cards.
More than 20% of debit cards are reissued each year. For a recurring debit card payment to be approved, current card data must be submitted.
While there are automated card updater services that can be used gather the payment data from a recently reissued card, not all cards can be updated automatically. Your customer service staff then must attempt to contact the card holder directly to get the information, which is labor and time intensive.
And, despite the best efforts, you may still not be able to obtain updated information. As a result, the money from the recurring payment is lost, impacting your revenue flow.