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?

Contact today

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.

ACH Payments Can Unleash The Potential of Direct Response Merchants

Three words can describe the direct response marketing industry – quick, measurable, and effective. Businesses across the country have always applied some form of direct response to attract and quickly convert viewers into buyers. Traditionally, this meant short-term sales and exclusive deals advertised on television or radio.

But the rise of ecommerce and mobile platforms in the past few decades has injected new life into this industry. Now, direct response marketing is more prevalent than branding. A report by eMarketer found that direct response marketing accounted for 58.4% of all ad spending in the US. In 2016, that meant $18.6 million for radio ads, $660.5 million for short form ads and 192 million for long form ads on TV. In 2018, spending on digital ads will surpass traditional media and 75% of these digital ads are expected to be on mobiles.   

The market is expanding and increasingly going digital. Online tools and sophisticated algorithms can help marketers automate much of the sales and targeting process, but payments is still a bottleneck for the industry. Legacy payments infrastructure in the US makes direct response more difficult.

Adopting ACH payments could help you unleash the potential of your direct response business. Here’s how:

Easier Payments

A quick and easy shopping experience is the core tenet of direct response marketing. By making the payments gateway easy to use, you can boost the conversion rate on your marketing efforts. The federally-regulated automated clearing house (ACH) payments system is particularly well suited to this industry. ACH payments include Echecks, which are digital versions of traditional checks. Consumers find the use of Echecks more intuitive. There’s no requirement to divulge private details or use a credit card to complete a transaction online. A direct response merchant account hooked to the ACH payments network will help you offer convenience to customers and boost sales.

Digital Infrastructure

Many payment providers help merchants seamlessly integrate the payments gateway on their website, so that payments can be processed online, over the phone, or through a virtual terminal.

The ach payments network is one of the most durable financial networks in the world. Last year, ACH accounted for 13 million credit transactions worth more than $17 billion across the country. More businesses and consumers are adopting the network every year.

Sophisticated developer tools can help you get the most out of this network. APIs, virtual terminals, PCI-DSS compliant security features, and quick-books integration can help you tightly integrate this system and process transactions with efficiency. 

Lower Risk

The ACH network is designed to prevent the most common risks of card payments – fraud and chargebacks. Same Day ACH enables a quick transfer from the customer’s bank account to your business merchant account. A direct network between banks is substantially less prone to fraud, consumer chargeback requests, and heavy fees merchants suffer on the traditional debit and credit card systems. By mitigating the risk, your direct response team can sell more confidently and boost profits over the long term. 


Direct response marketing is only effective if the process is quick and simple. You can offer heavy discounts and limited-period sales on popular products, but your payments system could be holding you back. Card payments carry heavy fees and risk, while conventional bank transfers are slow and inefficient. Joining the ACH network through a professional merchant account provider is a great way to eliminate payment hurdles for you and your customers.

Think the ACH network can help you cut costs, reduce risk, and boost sales for your direct response venture? Visit us at and speak to our consultants today.

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?



ACH Superior to Checks

If you’re looking for an alternative payment method to offer your customers, you may be considering using ACH payments.

Electronic payments are becoming increasingly popular among consumers and merchants alike. Old fashioned paper checks are on the decline.  Yet, electronic check processing through the ACH network is growing like wild fire. 

The decline in the use of paper checks is confirmed in research from the Federal Reserve.  That shouldn’t be too surprising since there are major disadvantages to paper checks including.

  • Paper checks are easy to misplace.
  • Consumers can claim that the check is “in the mail” or was not received by you
  • Electronic transactions clear much faster than paper items
  • Some consumers are careful about writing checks due to worries over ID theft
  • Younger buyers prefer electronic payments over paper checks
  • Consumers are concerned about the environment and want to go paperless where they can
  • Many businesses find accepting paper checks is a major hassle

What is an ACH payment?

An ACH payment or e-check is an easy way for customers to pay for goods or services online, by phone, mail or fax. Customers provide bank information, including routing & account numbers.  Payments are electronically debited from the consumers’ bank accounts and automatically credited to your business bank account.

You have full online reporting to track all transactions.  And payment data is easily imported & exported to your internal accounting systems.  Increasing productivity, decreasing expenses, and streamlining business operations.  

ACH payments can be used for one time payments. Or recurring billing plans can easily be setup so payments reoccur on a regular basis.

Benefits of ACH Payment Processing

Here are some of the main benefits of accepting ACH or electronic payments.

Recurring payments

There aren’t many business owners that wouldn’t appreciate having fewer things on their to-do list. When you sign up to accept an ACH payment, you’re offering your customers a simple way to pay you on a one-time or recurring basis.  

More efficient than checks

Choosing to accept ACH payments is quicker than waiting for a check to clear. Electronic transactions have higher priority than paper checks when clearing through the Federal Reserve.  Faster clearing helps your cash flow.   

Offer alternative payment methods

Consumers love choice – so offer them as many payment options as possible. Many merchants concentrate on credit card payments, but that is no longer enough. ACH payments give customers without cards, are maxed out on cards or who simply prefer to pay with bank debit an alternative to cards.  

Lower costs

ACH payments are cheaper than card processing. For low and standard risk merchant merchants, flat rates can apply.  For high risk merchants, ACH payment processing rates are always less than cards.  If you want an easy way to reduce your business expense and increase profits, ACH is an ideal choice.

Added security

The ACH payment system is one of the most secure methods of electronic funds transfer in the world. Millions of business, consumers, financial services, and government agencies use the ACH network to receive and send payments.  


Accepting ACH payments gives your customers a trusted method of paying you.  The growth of online bill payments expanded so that Americans are now comfortable paying for goods & services on a regular basis with echecks.

At the same time, you benefit by getting your money quicker, reducing operating expenses, increasing productivity, and expanding your customer base.      

How can ACH payments help your business?





How Adult Merchants Increase Sales with ACH Payments

Adult Merchants Offer Discreet & Secure Payment Methods

Content is king online.  Adult merchants constantly update content and reach out to audiences across the globe. Many adult merchants have a significant following of loyal customers.  

However, the risque content offered by adult merchants, combined with the need to control access to the the content by minors, can create hurdles when it comes to obtaining payment processing accounts.     

Challenges of Credit Card Processing for Adult Merchants

Adult content, dating services and adult toy stores all offer goods intended for people over the legal age. Age restrictions are difficult to enforce online. In countries like the United Kingdom and Germany, there are severe restrictions on the credit cards used for these services, to ensure only adults can access the services.

Although these services are federally legal in the US, adult merchants have trouble gaining access to traditional merchant accounts. Banks and payment providers class these businesses as ‘high risk’ and refuse to offer credit card payment services. They claim that online adult services face a greater risk of customer disputes and fraud. American Express, for example, doesn’t allow cardholders to pay for online pornography.

Card payments in the United States are considered to be the least secure method of payment.  Additionally, many adult merchants have recurring payments & subscription billing models that can be impacted when cards are the payment method 

One in five credit cards are reissued every year in the country.  Updating card information when cards are reissued is labor intensive.  And each time a recurring billing customer is contacted for obtain updated card information, you give the customer an unnecessary opportunity to cancel the the service.  

The combination of more cancellations and the inability to obtain updated card information negatively impacts your cash flow from recurring payments.  

Reasons ACH Payments are a Better Solution

Adult merchants discover that payment by ach provides a highly effective alternative to card payments.  Online payment by ACH is a secure option that protects businesses as well as clients.

The ACH network is widely considered to be the most efficient and safest payment system in the world. The network currently handles $41 trillion annually and more than 90% of all electronic transactions in the US are made with payments by ACH.  

With ACH, payments are electronically debited from customers’ bank accounts. Funds are then deposited to your business bank account.  Millions of Americans regularly pay for goods & services with ACH payments.  

ACH is particularly effective for recurring payments & subscription payments. Consumers rarely change bank accounts, whereas cards are frequently changed or reissued.  Once an ACH payment is set up for recurring billing, payments continue steadily, providing a stable source of recurring revenue.  With no need to contact customers & risk unnecessary cancellations.

There is rarely a need to update ACH payment info.  Therefore, cash flow from recurring payments continues uninterupted. With fewer cancellations occurring since customers do not have to be contacted to obtain updated card data. 

A high risk business model can be mitigated by processing higher volumes through a secure online payment gateway with extra protection. Still, you must keep returns & chargebacks below a certain threshold to be able to offer payment by ACH. This reduces the risk for everyone involved on the platform.


The more payment options you offer at checkout, the more sales you make. ACH payments are a familiar & trusted payment option for US buyers.  

ACH payments offer significant benefits over cards for recurring & subscription billing models.  Stabilizing cash flow while reducing unnecessary customer cancellation of services.  

How are you handling payments for your online adult business?  

Contact us today to establish your adult merchant account.