Fintech Insights

Don’t disregard ACH payments for your enterprise business


July 31, 2019

From EMV to mobile wallets and online transactions, the payment types enterprise businesses accept shape your customers' overall experience—for better or worse.

Given the diverse range of consumers you serve, it’s a good idea to offer a variety of payment options. Thinking about how you can use payments to drive seamless buying experiences will support your efforts to grow your business and keep your customers happy.

Enterprise businesses seeking more profitable, frictionless purchase and pay experiences have another, perhaps less-known, payment type to consider: ACH. Read on to learn more.

What is ACH?

ACH (automated clearing house) payments are electronic money transfers made between different banks via the Automated Clearing House network, one of the largest US payment systems. Online bill payments, direct deposits from employers and government benefit programs, person-to-person payments, as well as  payment processing funds, all use the ACH network.

Because of its traditional uses, it may come as some surprise that ACH is becoming a more common way for enterprise businesses to accept payments from their customers. But it is. Payments volume for ACH continues to rise overall. ACH payments increased 8.7% in Q4 2018, and same-day ACH payment volume grew 46% over Q4 of 2017

How ACH works

ACH payments are similar to debit card transactions in that both withdraw funds from a customer’s checking or savings account. However, since these payments use the ACH network, not the card brand networks, they are not subject to interchange and network assessment fees. This is a huge benefit and a large differentiator. Enterprises using ACH can reduce their associated processing costs significantly.

An ACH transfer occurs in two ways:

  • ACH debit transaction. Money gets “pulled” from an account, such as when a recurring bill payment is set up from a checking account. Debit transactions are typically free; customers don’t have to pay a fee to use ACH.
  • ACH credit transaction. Money gets “pushed” from one account into another account, as in an employee's direct deposit of their paycheck or a PayPal “Friends & Family” payment. Credit transactions incur either a flat fee or a fixed percentage per transaction.

What are the benefits?

In addition to significantly lower transaction fees, enterprise businesses that employ ACH payments can also enjoy several other benefits including:

#1 Increasing customer convenienceCustomers can enroll in ACH payments via a kiosk, portal, or website, without sharing a lot of personal information.

#2 Integration with loyalty programsCustomers’ ACH accounts can be automatically linked to an enterprise business’ loyalty program for seamless access to their account and rewards.

#3 Faster payment processing. ACH transactions can provide a faster in-lane experience because the approval process is an in-house PIN validation, eliminating the need to call the networks for authorization.

#4 Access to actionable data. Enterprise businesses can access insights into customers’ spending habits and use this information for more targeted marketing efforts.

#5 Support for all sales channels. Whether customers shop online, in-store, using their mobile device, or a combination of all three, they can pay via their ACH account on all platforms.

#6 Lower non-payment disputes. ACH payments are typically disputed less often than credit and debit card transactions because the approval process is controlled by the enterprise business (see next point).

#7 More control.You have more control over the approval process since you determine which customers you want to be able to enroll in ACH payments at your business.

#8 Easier recurring billing. ACH is a secure and efficient way, more so than checks, to facilitate recurring billing for your most loyal customers.

Frictionless freedom

By adding ACH payment acceptance, you can turn your enterprise businesses into the disruptor in driving the most loyal customers to more trips, bigger shopping baskets, and greater rewards. It’s the ultimate way to enable a frictionless shopping experience, increase customer visits and spending, and keep the costs of payment acceptance in check. To learn more about your options, contact us.