How Does A Small Business Accept And Receive ACH Transfers?

October 7, 2021

How Does A Small Business Accept And Receive ACH Payments? 

Businesses and individuals use ACH payments to move funds from one bank account to another. The funds you send through this process will be deposited into your receiving institution within a few days, making it an excellent choice for quick and secure electronic transactions. Here is how you can set up ACH to send and receive payments. 

ACH Payment Processing can help your small business process payments quickly and securely, giving you an edge over your competition. ACH (Automated Clearing House) quickly processes each transaction electronically, eliminates the need for a paper check, and costs less than credit card processing. 

As your business grows, you should always be looking to add new customer payment methods. While you may have started by accepting only cash and checks, you’ve probably graduated to processing credit cards. Those are not, however, your only payment options. You need to include automated clearing house (ACH) payments to your business, especially if you offer monthly subscription plans or other recurring transactions. 

What is an ACH payment? 

Direct bank account-to-account transfers are known as ACH payments, and they are a convenient alternative to traditional methods like checks, cash, credit cards, and wire transfers. One-time payments are possible but typically utilized for recurring billing. 

Monthly payments for utility bills or a mortgage are examples of ACH payments you may be familiar with as a customer. Also, systems like Zelle, which use P2P transactions, are in this category. 

Another use of ACH payments for business owners is to make direct deposits to their employees’ bank accounts. Every ACH deposit and credit is essentially a digital “check.” 

How do ACH payments work? 

EFT, or electronic funds transfer, is what ACH payments are. Customers can transfer money directly from their bank account to your business bank account to pay for goods or services. The ACH (Automated Clearing House) network delivers the funds quickly and easily. While this may resemble making a debit card payment, the process is quite different in this case. 

Consumer ACH payments go through four stages: 

  1. Customer authorization: A consumer authorizes direct payments from their bank account at a company’s website. 
  2. Transaction initiated: A business sends payment details to its bank or ACH provider, known as the Originating Depository Financial Institution (ODFI). 
  3. Payment requested: The ODFI requests payment from the customer’s bank, known as the Receiving Depository Financial Institution (RDFI). 
  4. Payment processed: The RDFI confirms sufficient funds in the account to make payment and, if so, processes it. 

How to accept ACH payments in your small business 

It is true that accepting ACH payments, especially recurring ones, can boost your revenue, but the transaction process is entirely different from accepting credit cards. Before incorporating ACH payments into your sales management operations, make sure you understand the specific requirements. 

Determine Feasibility 

While payment methods like cash, checks, and credit cards are suitable for nearly all customers, ACH payments aren’t. Because ACH payments, for example, only work within the United States, you won’t be able to take full advantage of this process if most of your business is international. In addition to geographic restrictions, there are a couple of other considerations relating to your customer base and types of sales. 

 Choose an ACH Provider 

To begin, find out if your bank supports ACH transactions by contacting them directly. Comparing their rates to those of third-party ACH handlers will help you decide if they offer this service. Check with your credit card processor to see if they can also handle these types of transactions. 

Confirm the contract clearly states the costs and benefits for your ACH payments without excessively long terms. All ACH fees will be separate from any current credit card processing. In particular, find out the chargeback and non-sufficient funds (NSF) fees and if you will have to pay extra for transactions over a certain amount. 

Make sure the process to set up an ACH debit is easy for both you and your customers. In addition, double-check the amount of online documentation, customer support, and reviews of each provider’s customer service skills. 

Set Up an ACH Merchant Account 

To accept ACH payments, you’ll need a separate merchant account for credit card sales. Even though it’s another financial asset, it shouldn’t be too much hassle to keep organized. 

Instead, look for a POS system that creates an additional account for automated clearing house (ACH) payments. 

To set up a merchant account, provide: 

  • Your certificate of incorporation, any other local documents as required 
  • A utility bill, lease agreement, or bank statement with a corporate name that identifies the company’s location 
  • Copies of valid identification for company directors and owners 

Many ACH providers offer recurring billing as a free option, but some do not. Double-check that you choose the free choice to maintain the benefits and savings for ACH payments. 

Choose your ACH Payment Methods 

While most recurring ACH withdrawals are set up and carried out online, this is not required to be the only option. In light of this, you should be aware of all payment options and use them effectively in your sales strategy. Use mail order and telephone order (MOTO) payment information on your computer. Encourage ACH transactions at your website for even one-off sales. Sure, you’ll have to prod customers to look up their account and routing information, but this is a better option for you. 

Avoid Unwanted Costs 

Regardless of the overall ACH processing fees, you want to avoid paying any additional fees or penalties that aren’t necessary. 

As a result of NSF and chargeback fees quickly depleting your profit margins, you should keep a close eye on your ACH account statement to ensure they don’t occur too frequently. 

Ensure your ACH provider has a Payment Card Industry Data Security Standard (PCI DSS) certificate and offers fraud and chargeback prevention services. 

Benefits of Taking ACH Payments 

Accepting ACH payments has its benefits. Consider the following advantages: 

They’re Convenient

When you make an electronic payment, it usually takes three business days for the money to show up in your bank account. It’s faster than processing paper checks, but it’s not the quickest option. The funds can be held up for weeks when credit card transactions go wrong. As a result, ACH payments are now more dependable and convenient than ever. 

Faster Processing Times 

The ACH payment processing time will be faster than paper checks thanks to its hands-free process, including not having to make a trip to the bank to make a deposit. The typical turnaround time is 3-5 days, just a day or two slower than credit card transactions. 

More Predictable Revenue 

While processing time and fees are important considerations when accepting ACH payments, the most crucial benefit is the steady stream of recurring revenue. 

To put it another way, you won’t have to stress about whether or not your customers will send you a monthly check. By tracking each ACH transfer deposit, you’ll be able to forecast sales accurately. However, keep in mind that PCI compliance is essential if you want to avoid paying extra fees. 

Additionally, you may be able to get an ACH merchant cash advance from some service providers, which eliminates the need to apply for a loan. So you can borrow money when business is slow and pay it back when business picks up. 

 Enhanced Security 

With many layers of security, the ACH network connects US financial institutions under strict regulation. In contrast to credit card charges, which can be disputed for any reason, disputing ACH charges has well-defined reasons. 

They enable recurring payments. 

The use of ACH payments allows your customers to set up simple recurring payments for regular or subscription services that your company offers. 


The convenience of credit and debit card processing often comes at a high cost per transaction. Process ACH payments in batches to achieve a lower flat rate per transfer. Although ACH transactions take a little longer to complete than credit card transactions, they are significantly less expensive. 

A credit card transaction, for example, entails two fees: a percentage of the total amount (ranging from 1.5 percent to 3.5 percent) as well as a processing fee of between 10 cents and thirty cents per transaction. When it comes to ACH payments, the fees range from a flat $0.20 to $1.50 per transaction to a percentage fee ranging from 0.5 percent to 1.5 percent. 

No Need for Expired Credit Cards 

Your customers’ bank account and routing number will likely remain the same for years, unlike credit cards, which expire or have their numbers changed if fraud is suspected. As a result, you won’t have to spend time tracking down new payment information. Allowing customers to set up ACH themselves reduces the time you spend on manual tasks. 

BNG Payments is payment processing made easy. Whatever your processing needs, we make it easy for merchants to accept credit and debit cards, mobile payments, e-commerce, and more. Contact us to find out more about what BNG Payments can do for your business. 

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