How PCI Compliance Relates to ACH Payments

How PCI Compliance Relates to ACH Payments

What is PCI Compliance?

The Payment Card Industry Data Security Standard, commonly known as PCI DSS, has long been the leading authority in terms of security for the credit card processing industry. Its reliability makes PCI enormously valuable when it comes to protecting not just card information, but any type of sensitive data, such as ACH payment processing credentials.

The misconception that only large companies that have huge processing capabilities need to be concerned with security will hopefully become less widespread. Today’s context makes it necessary for all merchants, irrespective of size, to protect sensitive information, and PCI DSS provides the necessary framework to do so. 

PCI is required for card payments.  Yet, it also adds protection for ACH payment processing.  

How PCI Helps Prevent ACH Processing Fraud

PCI compliance was introduced in the payment industry to stem the tide of fraud losses, but unfortunately, not all entities respect it as they should. A recent study released by the American Bankers Association (ABA) suggests that, in spite of the best efforts of banks to prevent fraud, their task is rendered difficult by retail data breaches.

These breaches, which have become the norm in recent years, are made possible by insufficient security protection.

The good news is that ACH payment processing, online banking, and wire transactions taken collectively make up just 2% of the losses reported by the ABA. Fraud losses, however, continue to increase, mainly because not all parties involved in the payment ecosystem are equally concerned with security and prevention.

The consistent implementation of PCI standards would make it considerably difficult for fraudsters to make a breakthrough to your ACH payment processing.

Tips to Protect Your ACH Payment Processing Account

Each business that uses ACH payment processing needs to do its share in this collective effort to prevent fraud. Even though ACH payments accounts register less fraud attacks, the risk is far from non-existent.

Since ACH payments are often low risk, ACH transaction processing is largely automated.  Therefore, detection of fraud might not occur in time to stop it. Given the fact that business accounts have just 3 days to reverse an ACH payment processing fraudulent transaction, it would be unwise to disregard this risk.

Some components of the PCI standard considerably reduce the prospect of suffering ACH payment fraud.  These include:

  • Maintaining a firewall
  • Using encryption when transferring sensitive data
  • Making sure that the virus protection is up to date
  • Putting into place a security policy that each employee needs to follow

How Employees Contribute to Fraud

Fraudsters can get access to ACH payment processing  information by targeting employees with tried-and-tested techniques,

For example fraudsters install  malicious software as email attachments.   When the employee clicks on the attachment, the harmful software is installed.  Some newer, more sophisticated, and quite effective techniques involve social engineering and impersonation.

These threats can be addressed by providing training to employees that handle ACH payment processing information on how cybercriminals perpetrate their acts.  

Also, two-factor authentication is an increasingly used method of securing payment information.

Regardless of what security measures a merchant decides to adopt, they need to be implemented and followed as consistently as possible, until they become a part of business as usual.


Following PCI recommendations for safe payment processing is a wise strategy.  Protect your business by following PCI standards for secure processing. 

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Echecks Increase Sales, Reduce Risk

Accept Echecks to Boost Sales

The more ways your customers can pay you, the more sales you make.   Echecks are the the most popular alternative payment method for US online shoppers.   Adding echecks to your checkout page is one of the easiest ways to get more orders.  

E Check Payments Increase Orders

Traditionally, credit cards have represented the most commonly used method of payment for US shoppers purchasing online.   Yet, echecks are increasing in popularity, with more than 30% of internet sites offering electronic checks as payment option at checkout.  

It is no longer enough to offer only cards as a payment option on your website. In order to gain an edge over your competition, it is necessary to diversify the available payment options so your customers can pay you any way they prefer.  

If you do not offer echecks, you are losing sales from customers that do not have cards, are maxed out on cards, or who simply prefer to pay you with a direct debit from a bank account.  Merchants that accept echecks report sales boosts of up to 20% when adding echecks as a payment option.

Echecks are processed either through the ACH network or with Check 21 technology.  The user experience is the same.  Customers supply their bank routing and account numbers.  Payments are electronically debited from the customer’s bank account and deposited into your account.

eCheck Benefits to You

  • Merchants who accept checks online report immediate sales “lifts” up to 20% after adding echecks at checkout.  Get sales from buyers who don’t have cards, are maxed out on cards, or simply prefer to pay with an echeck.
  • Reduced risk of chargebacks.  Credit card payments can be charged back up to 6 months after the transaction.   The chargeback risk for echecks is only 40-60 days.  And it is much more difficult to charge back an echeck transaction than a card payment.
  • If a card payment declines, offer an electronic check payment option and rescue the sale.
  • Echeck account processing is easier to establish than card processing. And often has lower rates

Merchants that rely on monthly subscriptions to ensure service continuity for their customers can use the recurring billing feature of ACH echecks and Check 21 echeck payments. As opposed to card information, bank account details rarely change, so the success rate of recurring electronic check transactions is much higher than with recurring credit card transactions.

High-risk merchants will find electronic check payments even more advantageous, as credit card payments are becoming notoriously difficult to get, particularly for those industries that are targeted by regulators. Even if service is eventually provided, the processing costs and fees will be high, and the payment processor can suspend the merchant account if it decides to apply more stringent underwriting rules.

Growth of Echecks for Online Payments

The popularity of ACH payments is reflected in the quarterly reports released by the National Automated Clearing House Association – the body that controls and regulates the entire ACH network. In April, 2015, NACHA announced that the overall transaction volume for 2014 increased by 5 percent compared with that of 2013. Given the fact that faster, same-day ACH settlement is just around the corner, the transaction volume that goes through the ACH network will surely preserve, possibly accelerate its upward trend.

Many customers prefer to pay via electronic checks.  The payment method is familiar and card information is not required. Data breaches are so common today that some customers are reluctant to purchase online with cards.

In addition, there are many instances when buyers simply prefer to pay with an echeck.  Or must use an echeck if they do not have a card or are maxed out on the card.  Under these circumstances, the availability of echeck payments on the your website becomes not only desirable, but necessary for the transaction to take place.

Americans are comfortable paying with echecks online.  Most US households already pay monthly bills the internet Echecks are a trusted method to pay for goods & services online. 


Offering echecks as an alternative payment option for your customers is a fast and easy way to get more sales.  And reduce your risks of chargebacks.  

Rates for echecks are generally substantially lower than for card processing. Accounts are easier to get approved. And chargeback periods are substantially reduced.    

Safe, affordable, and easily accessible, echeck payments are a must for any merchant that wishes to be competitive in today’s market.  Electronic checks are regularly used by millions of Americans to purchase goods and services. 

E check payments are convenient for customers.  And profitable for you.

Looking for an electronic check processor?  

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Diversify to Protect Your High Risk Processing Accounts

Multiple Electronic Check Processors is Smart Business

Merchants that are classified as high risk need to consider having multiple electronic check processors in order to protect business operations.  Having only a single electronic check processor is too risky in these days of changing banking regulations and account underwriting guidelines. 

Subprime industries are considered high risk merchants.  Subprime includes, but are not limited to, payday lenders, title loan lenders, loan modification companies, installment lenders, debt collection agencies, bankruptcy attorneys, and tax relief firms.

Sub-prime industries are considered to be high risk for 2 primary reasons.  First, the demographic of the market means that the consumers have high return rates for non-sufficient funds.  Secondly, there is a higher likelihood of chargebacks (revoked transactions where the consumer says the payment was not authorized.)

Echecks & the Subprime Industry

Electronic checks are commonly used to collect repayment of loans.  An echeck account gives you the ability to automatically debit recurring payments from the borrowers’ bank account.  Funds are then deposited to your business bank account.

There are 2 ways to process echeck transactions.  First, echecks through the ACH network.  Secondly, echecks through bank-to-bank data exchange based on Check 21 technology.

The ACH network is limiting for most lenders.  NACHA, governing body of the ACH network, limits chargebacks to 0.5% and returns to 15%. The high rate of returns and risk of chargebacks make it difficult for the subprime industry to comply with restrictive ACH regulations.

Therefore, most subprime lenders use echecks that process transactions through bank-to-bank data exchange instead of through the ACH network. This gives lenders the flexibility to have significantly higher returns and changebacks.  

Regardless of the way your echecks are processed, having more than one echeck account safeguards your business. Payment processing is simply too important to rely on a single processor.

Diversify Processing Today

One merchant with a sub-prime client base was processing $500,000 per month in echeck transactions.

Repeated recommendations were made to the merchant to diversify payment processing accounts to mitigate risk, The client agreed in principle that it was a good idea to have more than one account.

But, like so many of us, procrastination overtook action.  The one account was running smoothly for several months.  There appeared to be no urgency to acquiring a back-up account.

Then, without notice, the processor decided to shut down the account.  The decision had nothing to do with the client.  The processors’ banks simply made the decision to no longer process payments for the sub-prime market.

One day the merchant had $500,000 per month in processing,  The next day, the merchant was unable to process any transactions.  Their entire business was at risk.  And the scramble began to quickly obtain the volume of processing required to keep the business running.

Fortunately, we were able to secure another account for the merchant quickly.  Still, it was a nerve-shattering experience for all involved.  And one that could have been prevented by having a back-up account in place and ready to go.


The moral of the story is that it’s vitally important to be proactive when you are in a high risk merchant processing category, such as the subprime industry.  

Establishing more than one echeck account is a prudent payment processing strategy to protect your business operations.  It is particularly important for merchants who process a lot of transactions.  

Diversification is the key to your long-term success. Always have more than one echeck account in place.

Are you interested in diversifying your electronic check processor acccounts to protct your business?



High Risk Processing: What You Need to Know

What You Need to Know about High Risk Processing

Benefits of High Risk Processing

High risk processing with electronic checks gives companies a competitive edge, expands market reach, reduces shopping cart abandonment and enhances customer satisfaction.

  • Alternative Payment Choice.  Electronic checks are the most popular alternative payment option for ecommerce merchants.   More than 20% of online businesses already offer echecks as a payment method.
  • Competitive Necessity.  If you don’t offer echecks you lose sales to competitors who do.
  • Rescue Sales. If a card is rejected, echecks lets you rescue sales that otherwise would be lost.
  • Decrease Payment Processing Expenses.  When buyers buy with echecks, merchants save money because processing fees are much lower than those charged for credit cards.
  • Get More Buyers.  Over 75 million Americans do not have credit cards. Yet 90% of Americans have a checking or savings accounts and can pay with echecks.

What Industries are High Risk Processing? Certain types of businesses are automatically classified as high risk accounts.   These  have little to do the specific information about a particular company.  Rather, the classification categories are associated with general industry types.

Examples of industry classifications which fall into high risk processing categories include:  adult entertainment, call centers, travel, nutritional supplements, and certain segments of internet ecommerce.

High risk processing accounts may or may not have a different pricing structure than non-high risk processing merchants.  The specific pricing structures is determined on an individual company basis.

In the broadest terms, non-high risk processing accounts generally pay a pay a flat rate per transaction whereas a high risk processing rates are assessed a discount rate in addition to a transaction fee.  But, high risk processing merchants can obtain flat rate pricing if the business model and company history supports this option.

High Risk ACH Processing with Check 21

High risk processing may bypass the ACH payments network altogether and use Check 21 technology instead.  Check 21 processing is often used for merchants that cannot comply with NACHA for chargebacks to remain under 1%.

Check 21 for high risk ACH processing gives merchants greater flexibility to relationship to consumer chargebacks or revokes.  Check 21 operates outside of the ACH network and is not subject to NACHA rules.

Many high risk processing merchants take advantage of both the ACH network and Check 21 technology and have more than one account, depending upon the needs their business operations.  For example, for a recurring billing model, first time transactions for can be processed using Check 21 technology and recurring payments through ACH processing.

High risk processing accounts are usually established through a 3rd party processor. The number of 3rd party high risk processors has declined significantly within the past few years but there are still some good options available.

High Risk Processing Increases Sales High risk processing with echecks is an easy way to capture additional sales from buyers that do not have credit cards or simply prefer to pay by electronic checks.    Echeck transactions debit funds from the buyer’s bank account and automatically credits the funds to the seller’s account.  Companies that add electronic checks experience sales “lifts” of 8-20%.

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