When you hear the word “payment,” credit cards might be the first thing that springs to mind. They are, after all, the lifeblood of many modern merchant businesses. But while everyone is busy solving for contactless payments and buy now, pay later, you might be missing out on a value-added opportunity if you aren’t providing ACH support.
What Exactly is ACH?
ACH You might hear automated clearing house, or ACH, payments described as “direct payments.” They’re a simple, hassle-free way to move money from one bank account to another without involving credit cards or paper checks. Some people mistakenly confuse wire transfers with ACH payments, but there are key differences. While wire transfers immediately zap the funds into the recipient’s account, banks group ACH payments in batches, meaning it might take a few days for the money to find its way to the receiver. Then, there are fees. Wire transfers often require a fee of $25 or more to move money the same day. ACH fees are minimal, and sometimes banks provide ACH free for their customers.
You can offer ACH support for a variety of applications. E-commerce might seem like the most obvious use case, but ACH also makes sense for virtual terminals and as a way to generate steady, reliable income through recurring revenue.
Benefits of ACH for Your Customers
Your merchants will probably ask why they need ACH support if credit cards and other payment options meet most of their needs — or so they think. They might be interested to know that enabling ACH payments means they can see funds hit their accounts faster than other options. Their back-office teams will breathe easier, too, as ACH support takes some busy work off their plates. Though ACH payments aren’t subject to PCI compliance rules that govern credit transactions, the federally managed ACH system enforces its own data-protection mandates that make security a top priority. Plus, ACH payments safeguard bank details compared with the routing and account numbers stamped clear as day on paper checks often casually left lying around.
Adding ACH support could mean your small business clients see fewer “declines” and more “payment complete.” That’s because ACH support relies on bank account details, which people and businesses typically hang onto for years or even decades. Credit cards, on the other hand, force you to update your billing address every time you move, not to mention they come with expiration dates. Establishing a recurring revenue system with ACH support means clients can “set it and forget it,” minimizing the risks of missed or forgotten payments.
But the biggest ACH benefit that will capture your clients’ attention is cost. ACH fees pale in comparison to the hefty charges credit cards pile onto transactions. Paying less than $1 for an ACH payment, for example, is much easier to swallow than credit card fees that might run 10 times higher.
The convenience factor in instituting ACH support is compelling as well. Merchants that opt to include ACH could open their services up to a whole new base of customers. That’s because some people decline to open a credit card account, or circumstances prevent them from applying for one. However, just 5 percent of the U.S. population lives without a bank account, making ACH support critical to courting new customers.
Provide ACH Support to Small Businesses
Small merchants have a lot on their plate, and figuring out ACH payments won’t be at the top of their to-do lists. As a trusted payments adviser, it’s up to you to shoulder the responsibility of integrating ACH support so you can pass this convenient new benefit on to your small-business clients. When your merchants turn to you for ACH support, they’ve taken the first step toward not just bolstering their cash flow but elevating their customer experience as well.