ACH Payments: How Can It Benefit Small Business

What Are ACH Payments?

Before we dive into the world of ACH payments and how they can benefit your business, let’s take a look at what they are and how they work. Automated Clearing House payments, also known as ACH payments, is an electronic fund transfer system established in 1972 and managed by the National Automated Clearing House Association (Nacha) to move money electronically between bank accounts. Meaning, businesses and customers can send money one time or in the form of recurring payments through the ACH payment network. This method significantly helps cut out the excessive use of physical debit cards, credit cards, and pre-printed paper checks. ACH transfers include direct deposit, social security benefits, and tax refunds, and they are a safer, faster, and cost-effective payment alternative.

If you’re considering implementing ACH payments for B2B transactions, there are a few basics you should know.

Why do small businesses need to use ACH payments?

Even half a century later, ACH transactions still play a crucial role in a business’s payment infrastructure. It was reported that there were more than 6.4 billion ACH transactions in the U.S. during the first quarter of 2020 alone, and B2B payments jumped by 12.4% in the third quarter of 2020 compared to the same period in 2019. So, it might be time for small business owners to look at ACH payments as one potential payment solution for their business.

It is essential to keep in mind that even consumers who don't use a credit card, or those who don't use mobile payment apps at all, likely have bank accounts. Small businesses that accept ACH payments can take advantage of the space to appeal more to this segment of customers. Imagine if a customer pays with a check; it could get lost in the mail, you could be scammed or arrive late. Taking the ACH route with platforms like Online Check Writer gives you an upper hand in these situations. They can be helpful for small businesses searching for a secure and modern alternative to the old check and card payments.

If you are a business owner, you know your company depends on flexibility in all areas, including payment methods. The more payment options you give, the more likely customers will purchase from you. ACH Payments save your business time and effort by allowing you to track funds and keep an eye on the cash flow. They are generally better than paper checks or wire transfers, especially for businesses making recurring B2B payments.

Affordable

If you are using traditional checks or credit cards to process payments, you could lose money by paying more through extra processing fees. Whether you’re making a payment or receiving one, ACH transactions usually have the lowest fees of any payment method except for paying directly by cash. In contrast, wire transfers within the U.S typically cost between $25 and $30, while ACH payments usually cost between $0.20 and $1.50 per transaction.

This may seem relatively insignificant to many when comparing the processing time with credit card payments. But, when a significant volume of payments is made this way, the savings can be more than just substantial. For small businesses, every dollar counts. So, ACH Payments could be the perfect payment solution for small-scale companies.

Safety

There are plenty of misconceptions floating around the internet regarding the ACH process. The ridiculous one is that ACH payment processing comes with safety hazards and headaches. Unfortunately, this isn’t the case at all. The ACH is federally regulated and subject to Nacha rules and regulations. According to NACHA reports, the fraud rate among ACH payments is much lower than other online payment methods.

Checks and cards can get easily lost or stolen, putting your business’s confidential information in jeopardy. However, when you pay using ACH, the transaction of funds happens directly between accounts with bank-level encryption and an extra layer of cybersecurity protocols put in place to prevent sensitive data from being compromised. Moreover, as charges can be reversed quickly, ACH payments provide businesses with more protection than wire transfers or credit cards.

Efficient & Convenient

Say goodbye to paper invoices, pre-printed checks, and unnecessary trips to the bank. More than 93% of U.S. workers get paid on time via direct deposit, thanks to ACH. Since ACH payments reduce processing time, for high volumes of B2B payments, ACH transactions win hands down. You’ll find that many customers prefer ACH Payment over wire transfers or some other forms of payments, especially for paychecks, bills, and invoices due to this sole reason.

Businesses can streamline payments and receivables processes to platforms like Online Check Writer & Quickbooks, saving the Accounting departments from time-consuming manual processes. With the right software & expertise, you can automate your payroll processes, making timely payments easy. By simply adding their account and routing numbers, customers can pay invoices at recurring intervals you choose, meaning they no longer have to pay invoices manually. For other business transactions, ACH is even easier to use. All you need is the customer’s banking information.

Closing Words

If you’re searching for an efficient payment system for B2B transactions, setting up ACH payments can help you improve your payment performance and overall effectiveness. To retain an existing customer, attract a target consumer group, or stay relevant to the modern business landscape, adding ACH payment processing to your operations might be the solution. If you compare ACH transactions to wire transfers, you may find it slightly less secure since they don’t include a clearinghouse.

You want your customers to feel happy and satisfied. So, adapting ACH as the payment method for high-volume transactions, like vendor invoices or payroll, should be the first step small businesses must make before entering the industry.