How Rates are Set for ACH Processing

How Rates are Set for ACH Processing

What is an ACH Processing Account?

An ACH account enables you to direct debit funds from buyers’ checking or savings accounts and electronically transfer the funds to your business bank account.   

An ACH account captures sales from customers who do not have cards, are maxed out on cards, or who simply prefer to pay using ACH direct debit. 

Adding an ACH account to payment processing increases profit margins and reduces costs.

Three Elements in ACH Rate Structure

There are three elements in determining the pricing structure an ACH account.

1.      Type of transaction being processed through the ACH account

2.       Industry classification of the business establishing the ACH account

3.      Product or service being sold through the ACH account

Classifications of ACH Account Transactions

Classification of transactions associated with an ACH account is based the way in which consumer authorization is received.   Will the merchant receive written ACH account authorization?  Or will the merchant be accepting ACH account transactions online or over the phone?

Written ACH account authorizations received from customers for direct debits are considered low risk transactions and rates are correspondingly low.  Written authorizations are difficult to revoke because the there is a signature on file for the ACH account transaction.

For example, most people have written authorizations in place allowing an ACH account transactions to direct debit bank accounts for car payments, insurance premiums, rent or mortgage, utility bills and recurring payments for health clubs and other membership or subscription based services.   All of these would be considered low risk ACH account transactions

It is unlikely that a consumer will revoke a low risk ACH account transaction that has been authorized in writing.  As a result, rates for ACH account transactions with written authorizations have low, flat rate fees.   The exact rate charged for an ACH account transaction is based on the number the number of transactions processed each month.  The more transactions that flow through an ACH account, the lower the rate.

ACH account transactions initiated online or accepted by phone without written authorizations carry a higher risk since there is no written authorization in place.  Rates for these types of transactions can be higher than for written authorization, but this is not always the case.

For example, billers who accept ACH account transactions for online payment of rent, utility bills, tuition, car payments, and similar types of transactions at the biller’s website may still be charged low flat rates.  These types of ACH account payments, whether made online, by phone, or by written authorization, are seldom revoked by consumers.

Businesses selling products or services online or accepting ACH account transactions by phone may or may not have higher rates.  Much depends upon the types of product and service being sold and the industry classification of the merchant with the ACH account.

How Products/Services Relate to Rates

Some products and services sold online are low for ACH account transactions because there is not much chance of consumers revoking the transaction.  For example, a well-established internet retailer selling moderately priced items often can take advantage of flat rate pricing for ACH account transactions.  

Other products and services have a higher chance of consumers revoking a transaction.   In these cases, an ACH account transaction will be priced at a higher flat rate transaction.  Or, the ACH account provider may add a discount rate in addition to a transaction fee.

High Risk ACH Accounts

Certain merchant categories are considered high risk for an ACH account.  Common high risk merchant account classifications for an ACH include adult entertainment, travel, electronics, jewelry, virtual goods, tickets, dating, software and games.  Merchants in these categories experience a statically greater likelihood of consumers revoking an ACH account transaction.

High risk merchants can certainly take advantage of ACH account transactions to increase sales.  Rates generally include a discount rate along with a flat rate transaction fee.  Discount rates for a high risk ACH account generally range from 1-3%.  The specific discount rate associated with a high risk ACH account depends on the underwriting criteria of the ACH account provider.


Regardless of rate structure, an ACH account always cost merchants less than credit card processing fees.  You can save 50-95% for ACH account transactions compared to rates for the same transactions processed with credit cards.

Are you interested in increasing sales & profits with ACH payment processing?

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How ACH Increases Your Profits

More Ways to Pay = More Sales

Automated Clearing House, or ACH payment processing, is one of the oldest, most reliable forms of electronic funds transfer.   

The last decade has seen ACH transactions soar, due to the advent of web-based ecommerce and consumer preferences for paying bills online.

ACH payments produce a bottom-line impact by generating new revenues and reducing payment processing expenses.   ACH echecks are the most popular alternative payment method for US shoppers.  

Accept checks online.  Accept check by phone, mail & fax orders.  Give your customers another way to pay you.  

One Time or Recurring Payments for Billers

ACH Payment Processing
ACH Payment Processing

ACH transactions are popular for online bill pay.  Any company that bills customers should have a website that enables customers to make payments.

ACH payments are particularly effective for recurring billing.  Utility bills, car payments, insurance, health clubs, propriety management, internet services, and an array of other types of billers have long benefited from stabilized cash flows that result from using ACH recurring payments.

Interested in increasing your profits with ACH?  

Contact today.

What you need to know about same day ACH debits

These days, the new same day ACH (Automated Clearing House) rule is making the rounds. With this rule, merchants can receive funds as quickly as within 0 to 1 business days. However, before we go into the nitty gritty of same day ACH debits, let us learn about ACH as to what it is and how it works.

What does same day ACH means?

Same day ACH is a new rule brought out by NACHA (National Automated Clearing House Association), which manages the ACH network. According to this, the ACH payments will be processed within one business day, speeding up the payment process significantly.

This new rule will change 4 big things in the ACH process. These are:

  • First of all, the new rule will create a new entry window for banks and credit unions in order to differentiate same day payments in one batch file.
  • Thus, there will be two extra windows for the financial institutions or providers to submit an ACH file. Right now, the ACH file is processed only once during afternoon in every business day. However, after this new rule, the frequency will double in 2017 and subsequently triple in the year 2018 when one additional window opens.
  • The same day ACH rule requires every financial institution to get same day credits from 2016 onwards and thus same day debits from 2017 onwards.
  • All financial units must make give the payee the qualified same day funds by the end of the same business day.

What is ACH?

  • ACH, which is an acronym for Automated Clearing House, is a network that essentially connects credit unions and banks in the whole of the United States. This allows more than $40 trillion to move between several accounts. For instance, customers repay their credit cards, receive their weekly salaries through direct deposit, etc. through an ACH transaction. In the same way, businesses make use of ACH technology to move their billions of money every year on the backend.
  • Thus, ACH is a dynamic, ubiquitous, and cost-effective basic system that connects credit unions and banks in the United States. Although, this system is great, it also has potential to improve, just like every other thing.
  • One of the reasons why an ACH transaction takes time is because it depends on correct data and good funds between banks and credit unions. And the receiving & sending banks each have a day to return the transactions. And, if the payment details are wrong or if there are no funds in the accounts to be debited, then the financial institution can only issue roughly 80 ACH Return Codes or a change notification.

These things can thus cancel or delay the payment altogether. Therefore, the slow ACH process is not appreciated by a lot of people. However, with the same day ACH debits, your ACH transaction can now be processed really fast.

Important dates to note regarding same day ACH

  1. Phase 1: The phase 1 of same day ACH was rolled out in September 2016 for credits or payouts.
  2. Phase 2: The phase 2 of same day ACH will roll out in September 2017 for debits, payouts, or collecting payments.
  3. Phase 3: The phase 3 of same day ACH will roll out in March 2018, which will include a new settlement window.

Everybody wants to send & receive money quickly.  Same day ACH debits & credits lets you take advantage of faster payments.  Which is a great step forward in how ACH transactions are processed in

Do you want your business to benefit from the same day ACH debits & same day ACH credits?  Contact National ACH on 702-323-5761 or email us at

Same Day ACH Credits

Consumers and businesses are used to getting what they want when they want it. Your groceries get delivered the same-day and you can summon an Uber in minutes. Payments, however, still tend to take a while.

Even in 2016, the quickest way to get your money from one bank to the other is to withdraw the cash and walk across the street. This is because major banks synchronous their accounts with the Automated Clearing House (ACH) network only once a day. This meant that payments would take at least a day or two to be completed.

This system is known as Classic ACH and it’s been around since the 1970’s.  Thankfully the network is now getting a much needed upgrade.

Say Hello to Same-Day ACH

The upgrade is pretty simple. The National Automated Clearing House Association (NACHA) has pushed banks to start synchronizing accounts with the ACH network three times a day. Because the accounts are synchronized and updated more often, same-day payments are now possible. American workers and businesses can now get their hard-earned money much faster.

The American payments system has lagged behind other countries. Mexico, the UK, Sweden, and Singapore are all adopting same-day payment systems. Even India has leapfrogged most developed countries and installed a quicker payment network for businesses and consumers.

These countries have successfully adopted real-time or same-day payments because their central banks have responded to the demand for such a system from businesses and consumers.  In the US, the Federal Reserve is in the process of modernizing the payment system. Upgrading ACH to same-day is part of this plan to catch up with the rest of the world.

A Deloitte report found that there were a number of reasons for this push to faster payments. The regulatory landscape is ideal, technology has developed enough to support such a system, consumers prefer the convenience and merchants see the value in a quicker service such as this.

But payment systems like these are vast, complex and highly technical. This means it is easier to build a system from scratch (the way India has done) than to renovate or upgrade an existing system. This is why the US system has taken so long to catch up. But now the upgrade is complete. A new NACHA rule compels ACH-capable financial firms to accept ach payments starting September 23, 2016. This means companies and individuals can now have their credits completed in a day. The system for ach payments debits will be expanded in late-2017. The whole upgrade is divided in 3 stages, which will all be completed in 2018.

What Does Same Day ACH Credits Mean to You?

Considering the system upgrade is so recent, there’s a lot of unknowns for businesses across the country. There are some clear advantages for the whole economy with faster ACH payments.

ACH is the most ubiquitous payments network in the country. The system is used by every bank and credit union in the country. This makes it convenient for customers and businesses to use the network for faster ach payments. So far, only private networks developed by card companies (Mastercard and Visa) have offered quick payments, but these also tend to be expensive.

Credit card transactions can cost up to 2% of the transaction and debit cards can cost close to 1%, the ach payment system charges a flat fee between 10 and 50 cents depending on volume.

Cheaper and faster payments on a wide-spread network like ACH has the potential to help a lot of businesses.

  • Payments are automated, which leaves less room for human error
  • Flat fee helps businesses preserve their profit margins
  • Quicker payments to employees, suppliers, affiliates, and vendors helps you obtain & maintain a competitive edge.

Same Day ACH Debits Coming in 2017

Same-day ach payments are not live for debits just yet. Debits will be available in September 2017. Businesses are expected to adopt ach at a faster pace by then. Customers are already more willing to spend money with a business which is part of such a trusted network. The payment network reduces the risks of fraud and chargebacks and is clearly more convenient than other traditional payment methods.  Attractive benefits like these have convinced many businesses to sign up for ACH merchant account and accept ACH payments.


A recent survey by NACHA found that 79% of consumers and 82% of workers had either received or heard of ACH payments. A majority of these people were happy with the service, thought it was quick and considered it highly secure. The survey and accompanying white paper showed that ACH was ingrained in the national consciousness and this made it the best system for businesses to use.

Now, with same-day ACH payments, the system for credits is faster and better than ever.  The network is now live and you can get start processing same day ACH credits immediately.  can start getting involved in same-day ACH payments and credits right away. The rates for this quicker services are yet to be determined by banks, but payment processors may be able to offer better rates.

Could your business benefit with same-day ACH payments?

Contact us to find out.

Same Day ACH

Same day ACH is now a reality for initiating credits.  For debits, same day ACH will be available next year.

 ACH is a form of Electronic Funds Transfer or EFT.  Each time you pay or receive salaries and wages, make direct deposits, pay for utilities or conduct any other transaction, the funds move through the ACH network.

The National Automated Clearing House Association or NACHA is the organization that regulates the activities of the ACH. It has initiated a new and innovative additional network functionality to streamline and speed up the fund transfers.

This approach is termed as Same Day ACH. Here’s how it works.

 Same Day ACH Windows

Prior to same day credits processed through the ACH network, recipients had to wait at least a day, and often more, to receive the funds.

The new Same Day ACH system which went into effect in September 2016 offers users, banks, and financial institutions the facility of two additional windows for processing credit transactions:

  • The morning window that ends at 10:30 AM ET, with all transactions getting cleared at 1:00 PM
  • The afternoon window that ends at 2:45 PM ET, with all transactions getting cleared at 5:00 PM

These windows make it possible for the speedier movement of funds between accounts. As long as payments are made within the specified time frames, credit transactions are processed the same day they are initiated. In this way, recipients of funds can access the money by the end of the business day.

Conditions for Same Day ACH

To make use of this facility, banks and financial institutions must comply with certain conditions.

  • International transactions are not eligible for Same Day ACH
  • Transactions of value above $25,000 cannot qualify for Same Day ACH
  • A Same Day ACH fee of 5.2 cents per transaction is applicable on the transaction. This fee can help RDFIs recover some of the costs they’ll incur for providing the facility and is paid by the ODFI or bank initiating the Same Day ACH transfer.  

Remember, though, your rates for same day ACH will be higher than the base fee charged to the banks.

Conclusion:  Benefits of Same Day ACH

Businesses, individual consumers, banks, and other financial institutions will find that the Same Day ACH is highly advantageous in many ways.

  • Quick exchange of business to business payments and information
  • Consumers can pay bills even on due dates without incurring penalties for late payments
  • Consumers can instantly move funds between the various accounts they hold
  • Companies can pay hourly wages to their workers and if needed, make emergency payroll payments
  • Employees can have fast access to their salaries and wages
  • Receiving businesses collect payments faster and thus, improve their cash flow processes
  • Goods and services can be bought and sold faster because of the availability of instant finance
  • More economical system for expedited payments and receipts as compared to other options for collecting and receiving funds
  • Consumers can receive payments quickly in times of emergency situations
  • Customers can make quick decisions and take action when managing their finances and investments.

How can your business benefit from Same Day ACH?



In the Money Lending Business- Here’s What You Need To Know About Online Payments

Money lenders and loan servicing companies operate in trickiest part of the financial industry.  Not everyone can handle the higher risks and volumes associated with a lending business.

Whether you offer car title loans or payday loans, you probably deal with a lot of regulation and inherent risk. To survive in the industry, your operations need be streamlined and completely efficient.

The best place to start is with the infrastructure that allows your customers to pay you. Studies show that traditional forms of payment are on their way out. Plastic is simply more convenient than paying with cash. And paying online, directly from your bank account, is even easier than paying with a card.

Convenience is Key

Loan service companies and loan providers face pressure from both sides – government regulations and customer defaults.

The local authorities and regulators are tightening the rules around lending, which puts pressure on loan companies.

Meanwhile, a study in Texas found that over the course of a year, more than 54% of borrowers defaulted on their payday loans. A similar study in North Dakota found that 46% of borrowers had defaulted on their loans after 48 months. Here are the findings from that study:

  • To deal with this problem, loan companies must innovate and offer convenient solutions to help encourage payments from customers.
  • Moving payments online has the dual benefit of allowing loan companies to get access to bank accounts and making it easier for customers to payback their loans.
  • The most convenient platform for online lenders and loan companies is Automated Clearing House or ACH.

ACH Payments

The reason ACH payments are so popular with loan companies is because it offers unparalleled convenience for both borrowers and lenders. ACH payments platforms allow the lender to automatically draw out the amount owed on a daily, weekly or monthly basis.

Borrowers who sign up for the service can have their dues paid automatically over the period of the loan. A writer for the New York Times found that this system of ACH payments encouraged borrowers to be more disciplined. Borrowers are put under pressure to manage their finance more carefully so that they can have enough money in the account to meet their living expenses and the automatic withdrawals from loan providers.

The infrastructure around ACH payments is designed for high volumes and regular payments. Some providers even offer services to let lenders get paid by checks over the phone, mail or fax, using a virtual terminal.

Convenience isn’t the only reason ach payments are better for loan providers. The payment platform is massive and the network handles close to 90% of all electronic payments in the United States. The ACH network is also considered to be among the safest and most secure electronic funds transfers system in the world.  

A study by SAP found that automated payments through echecks are less prone to errors and fraud, since there is minimal human interference in the whole process.


ACH payments reduce costs, assure that payments are made on time, stablize revenue from recurring payments, and are safe & secure. This makes it the ideal payment solution for lenders and loan companies across the country.

Securing payments and offering convenience to customers will do more than just help your business survive.  It will help your business thrive. 

How are you accepting payments from your borrowers?

Contact us today