Posted by NationalACH on Jul 26, 2016
Why Business Use ACH Payments

 ACH Payment Processing

The Automatic Clearing house (ACH) system is used as a secure means of crediting and debiting billions of dollars’ worth of payments every year. ACH payment processing is used widely in numerous industries for both business-to-business and business-to-consumer transactions. This article will explain what an ACH payment is, what they do, and how they can enhance your business.

What Is An ACH Payment?

An automatic clearing house or ACH payment is an electronic means of either depositing or withdrawing funds from a bank account. They can be used by businesses and consumers alike, and they make up a huge percentage of electronic transactions. According to statistics from NACHA, 24 billion payments were made via an ACH payment in 2015.  

How They Work

To initiate an ACH debit, the customer must give you permission to deduct money from a saving or checking account.  Authorizations can be obtained in written form, over the phone, or through a website.  

Once authorized, the payment is automatically deducted from the buyer’s bank account. The funds are then electronically credited to your business bank account. An ACH debit can be used for both one-time & recurring payments.

ACH credits are used to electronically deposit funds to bank accounts. 

 The Clearing House and the Federal Reserve act as the clearing houses for ACH payments  The payment process is automated. Once the account is set up, there is minimum effort required by you to send and receive payments.

What Are The Different Types Of ACH Payment?

ACH credits are used to send money to bank accounts.  For example, employers use ACH credits to direct deposit wages.  The government uses ACH credits for tax refunds and social security payments.  Lenders use ACH credits to direct deposit loans.  Businesses use ACH credits to send money to vendors,& refunds to customers.

ACH debits are used by billers to collect payments for utilities, mortgages, insurance premiums & loan repayments.  And millions of US consumers regularly use an ACH echecks to pay for goods & services online and by phone, fax & mail.

Businesses use ACH debits to accept checks online and check by phone, fax and mail orders.  Echecks are the most popular alternative payment method for American shoppers.  More than 30% of internet sites offer electronic checks at checkout.  The more ways customers can buy from you, the more sales you make

ACH debits are particularly effective for recurring payments.  If you offer subscription or membership billing, ACH payments are the way to go. Customers rarely change bank accounts, ensuring that recurring payments continue uninterrupted.  

Compare this to card payments.  

One in every five cards are reissued each year.  The card information has to be updated before a recurring payment is approved. Updating card information is time consuming, expensive, and gives consumers an unnecessary opportunity to cancel a recurring payment.  

Benefits for Businesses

There are major benefits to businesses who choose to accept ACH payments. These include:

  • quicker payments
  • reduced labor time
  • fewer mistakes
  • fewer resources required
  • giving consumers an alternative means of paying for goods
  • lowering processing fees, which is especially beneficial for recurring payments
  • increased profits through lower fees
  • better cash flow

Benefits For Consumers

There’s numerous benefits for consumers as well. These include:

  • a reduced risk of fraud
  • a greater sense of security for consumers
  • less need to worry about payments getting mislaid
  • providing a convenient alternative for customers who prefer not to make check or credit card payments

How to Accept ACH Payments

If you want your business to benefit from the many advantages of accepting an ACH payment, you’ll need to establish an account with a ACH merchant account provider.  

It's easier to establish an ACH merchant account than card processing.  And rates are often significantly lower for ACH than card processing.

To apply for an account, you submit an application along with information about your business.  Once approved, you can accept checks online with a simple API integration.  And you can accept check by phone, mail or fax orders using a virtual terminal.  


Electronic payment methods continue to grow in popularity, and they offer numerous benefits to businesses and consumers alike. You benefit from improved cash flow, quicker payments and lower transaction fees.  Your customers get a convenient, secure way to make a one-time or recurring payments.  

How is your company handling electronic payments?

Contact today.