Posted by NationalACH on Jul 01, 2015
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Echecks for Recurring Payments

In recent years, ACH payments have experienced continued growth.  A large part of the grwoth curve is due to the increasing popularity of recurring payments.

The results released by the National Automated Clearing House Association for the first quarter of 2015 confirm this trend. The network processed 4.82% more recurring payments compared to the same quarter of the previous year.

Advantages of ACH for Recurring Payments & Subscription Billing

Collecting recurring payments for subscription-based services through the ACH network has some key advantages over other payment methods. Relying exclusively on cards for recurring payments creates revenue leakage that could be prevented with ACH payments.  

Credit cards expire, have spending limits the customer may not be aware of, and are vulnerable to loss and fraud. As a result depending on card payments for recurring payments can result in discontinued services, customer complaints, and decreased profits. These consequences can be damaging for a business that relies on customer retention and consistent cash flow for success.

Accepting ACH payments for subscription billing removes these challenges. Since the amount is debited directly from the customer’s checking or savings account, recurring payments continue without interruption.  

Customers who do not feel comfortable with providing the card information and who do not have cards find it convenient to pay with an electronic check. And if a card is declined, offering an echeck payment method can save the sale.  

An additional advantage of accepting recurring payments through the ACH network is the reduced costs. While credit card payments are more expensive because of the notoriously sophisticated interchange fees, the ACH network does not have such fees. As a result, the merchant that accepts ACH payments will make a profit from both an improved authorization rate and lower payment fees.

ACH Still Not Real Time

Although NACHA is moving towards same day settlement, it is still not a reality.  For the present time, ACH processing is not "real-time" in the same way as cards.

With a card transaction, funds are frozen for a particular payment.   For ACH payments, items clear daily through the Federal Reserve midnight.  Therefore, there is always a small chance the funds for the ACH debit will no longer be available to cover the transaction.

It may take up to 24 hours until a merchant finds out that the amount cannot be charged due to insufficient funds. Therefore merchants selling tangible products are prudent to wait a day before shipping to be sure the payment clears.

Merchants who sell products and services that are delivered electronically need also take  this into consideration before implementing ACH payments. For small ticket sales of digital goods, the benefits of increased sales far outweigh the risks.  


The rewards of using ACH for recurring payments and subscription billing far outweigh the risk. 

Once bank accounts are established, they rarely change. Recurring payment continues uninterrupted, with no need to update recurring billing information.

Compare this to cards.  

Each year,  1 in 5 cards are reissued. Each time a card is reissued, you have to update payment information. Which is time-consuming and expensive. And gives customers an unnecessary reason to cancel. 

ACH payments are steady and consistent over time, generating you more revenue. Increasing the lifetime value of customers. And protecting your cash flow from recurring payments.

Do you want to add echecks to protect cash flow from recurring payments?