The Automated Clearing House (ACH) offers many financial benefits over other payment options. Its primary advantage is a low transaction rate. But, finding ways to make it free is possible, and even better.
This article discusses how to send and receive payments via ACH at no cost to you.
Payroll direct deposits and most bill payments are free via ACH debit transfers. Banks may charge a fee of about $3 for moving money between accounts to another bank using ACH credit transfers, although many offer external funds transfers for free.
Let’s look at ACH debit transfers and ACH credit transfers in more detail.
An ACH transfer is an electronic network for payment processing that uses a national Automated Clearing House system—a connected network of U.S. banks and financial institutions. It allows bank-to-bank direct payments as business to person payments, person to person payments, or any combination of person and business payments. Transactions cost less than most other electronic payment methods, such as wire transfers and card-based transactions.
ACH allows for numerous transactions with one customer at a regular frequency that you determine. If you regularly experience high cash flow, you significantly save on credit card payments. It’s a popular form of monthly billing because it offers a smooth billing process and consistent payment with fewer billing errors.
ACH can be done through most bank accounts, including:
There are two types of transactions: ACH debit transactions and ACH credit transactions. Let’s look at both.
An ACH debit pulls money from a payer’s bank account. ACH credits automatically pull funds from a customer’s account.
ACH debits are free for the payer. For the payee, typically, pulling funds has a cost, but not always. You may avoid bank charges if the cost is covered by bank account fees. If you are charged, consider shopping banks or third-party processors for a lower processing fee. It’s worth noting, third-party providers often bury costs in contracts, so be sure to look for transparent pricing.
An ACH credit pushes money from the payer to the payee—the customer does the work. In most cases, there’s a charge to the payer for pushing the money. Similarly, if you push money to your vendors, you would be charged.
Still, charges aren’t always the norm. They don’t often happen with direct deposits, a form of ACH credit. In other cases, banks may charge a fee of about $3 for bank deposits, but many offer these transfers at no charge.
Electronic checks (eChecks) are another form of ACH credit and offer unique features. As a payer, you don’t need to sign up for ACH services to initiate online bill payments; you don’t even need a check to enjoy ACH-related features. Some companies offer eCheck payment capability on their website as an add-on feature for online payments via a secure link or in checkout. They only require your bank login information.
As a business owner, you can also enjoy check verification capabilities. eChecks provide instant funds verification without the fee for processing ACH.
Some banks charge fees, and some don’t. Carefully research the banks you’re considering. For those that charge, an ACH debit is more likely to be free than an ACH credit. Many banks absorb the ACH cost by including it in a standard bank fee, so you won’t see a separate charge.
Most third-party payment processing services charge payers for ACH credits, and charge payees for ACH debits because there is no underlying bank account fee to absorb the cost.
Payers and payees are charged for insufficient funds or for incorrect bank information during bank transfers. It’s best to offer ACH to reliable customers to ensure regular clearing of funds. Additionally, be sure to enter correct bank information during setup to avoid bounce charges. Continued issues may result in a termination charge.
As a merchant services provider, BNG Payments offers ACH payment processing software that syncs directly to your accounting software as an all-in-one cash register. BNG also offers payment processing hardware. As an all-in-one merchant services company, we handle all in-store and remote ACH payables and receivables. We even offer third-party processing services with predictable flat-rate pricing.
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.