The Automated Clearing House (ACH) network transfers funds quickly and securely, making it ideal for business transactions. Service professionals and contractors can accept ACH payments online or in person and pay lower processing fees than if their clients paid by credit card. Whether you are invoicing customers or requesting payment by text, the ACH payment method fits into your current workflows.
Indeed, many financial institutions and payment service providers (PSPs) facilitate ACH payment acceptance. This guide explores how ACH works, the best ways to collect ACH payments, and how to start processing them. Discover which businesses benefit from accepting ACH payments and which vendors offer efficient solutions.
Should your business process ACH payments?
ACH payment acceptance is a low-cost alternative to credit card processing and is the preferred method by many consumers. Indeed, the National Automated Clearing House Association (NACHA) reported that ACH payments increased by 6.3% in the second quarter of 2024 for 8.3 billion ACH transactions.
Consider these questions when deciding whether you want to accept ACH payments:
- Does your business process a high volume of invoices or paper checks?
- Are you a high-risk merchant who is unable to establish a credit card processing account?
- Do you sell subscriptions or memberships?
- Does your company handle monthly rental payments?
- Are you looking for ways to reduce credit card processing fees?
- Do you sell goods or services to other businesses?
- Does your target audience prefer cash or check over credit or debit?
[Read more: 10 Best Practices for Streamlining Payment Processing]
How do ACH payments work?
An ACH transaction is an electronic payment method that transfers funds from one bank account to another over the ACH network. Employees receive wages through direct deposit, which is an ACH payment. Likewise, customers often pay recurring bills by furnishing their bank account details to the utility company or subscription provider.
NACHA sets the operating rules and guidelines for the ACH network. The requirements cover security, identity verification, and customer authorization. For instance, businesses must have customers sign ACH authorization forms before processing recurring or card-on-file transactions.
There are two main ways to receive ACH payments. The first is through a bank account and is best for occasional transactions. With this method, your customer initiates the payment after you supply your account details.
The second version involves a third-party payment processor (TPPP) and is preferred by most companies. You request funds from the customer, and they select ACH as the payment method. Both ways use the ACH network; however, a TPPP typically deposits funds faster and offers more flexibility to use customer-friendly tools, like invoicing, text-to-pay, and pay links.
ACH costs vary by payment provider but are always less than credit card processing rates.
How to accept ACH payments
Collecting ACH payments requires a bank account and a PSP. If your business already takes credit cards, check with your processor to see if you can enable ACH payments.
Follow these steps to take ACH payments:
- Establish a business bank account. Since ACH transactions move funds between bank accounts, you must choose and open one before accepting ACH payments.
- Pick a payment processor. Look for a provider who supports your business model and payment methods. Options include Helcim and Payment Depot.
- Set up ACH payments. Review your provider's requirements for enabling ACH. You may need to integrate payments with your e-commerce site or invoicing software.
- Prepare authorization forms. Have physical and digital forms for authorizing one-time and recurring ACH payments.
Once you've met these prerequisites, you can process ACH payments online or in person. It's simply a matter of choosing how to bill clients, entering the payment amount, getting their permission and banking details, and scheduling the transaction.
[Read more: What Is a Secure Payment System?]
What is the best way to take ACH payments?
When accepting ACH payments, consider your business model and customer preferences. For instance, health clubs and fitness centers may keep paper ACH authorization forms on hand to set up new memberships in person but also have an online portal for clients to manage their billing information. Meanwhile, a consultant may accept ACH payments instantly through Zelle.
Invoicing tools and online platforms support recurring transactions. A company using QuickBooks Online can pay vendors via ACH and process ACH payments. Many website builders, e-commerce platforms, and subscription software applications have built-in payment processing that supports ACH. Customers enter bank details through a secure online form to automate billing.
Payment processors for ACH payments
Many credit card processors support multiple payment methods, including ACH. Alternatively, you can accept ACH payments in QuickBooks or other accounting software, and some e-commerce platforms with built-in payment tools also support electronic bank transfers.
Ask about ACH processing times, rates, and methods when talking to vendor representatives. Additionally, unless your company only takes ACH payments, several other factors, such as fees, integrations, and reputation, must be considered when choosing a payment processor.
Learn how the following merchant account providers facilitate ACH payment acceptance:
- Helcim: Businesses can collect ACH payments using several Helcim tools, including online invoicing, subscription management, payment requests, and the virtual terminal.
- Merchant One: This vendor provides a customer vault for secure card-on-file storage, supports ACH payment acceptance through the virtual terminal, and allows recurring payments.
- Stripe: Merchants can manage ACH direct debit payments for subscriptions, memberships, or one-time purchases through the Stripe dashboard.
- ProMerchant: The Payments Hub Virtual Terminal supports key-in transactions, whereas the Authorize.net payment gateway automates repeat payments.
- Payment Depot: This provider supports most payment gateways and seamlessly integrates with SwipeSimple’s software for storing cards and managing recurring payments.
- Stax: This subscription-based ACH processor enables one-time and recurring ACH payments through a virtual terminal. Stax stores and automatically updates cards on file.
Getting paid: ACH payment time frames
The ACH network processes payments over 23 hours on weekdays and settles them four times daily. It typically takes one to two days to process ACH payments, but some providers like Zelle make funds available instantly. NACHA estimated that "80% of ACH payments settle in one banking day — or less (by regular and Same Day ACH)."
[Read more: 10 Ways to Reduce Your Credit Card Processing Fees]
Costs of accepting ACH payments
ACH costs vary by payment provider but are always less than credit card processing rates. Most processors charge a percentage per ACH transaction plus a flat fee. They usually cap prices so you aren't hit with super high expenses on large product or service payments.
Bank-to-bank transfers initiated by your client could be free or very low-cost. However, third-party payment processors improve the customer experience and give your business more control over the process. NACHA said that fees through a TPPP range from 0.5% to 1.5% plus 20 cents to $1.50 per transaction.
ACH payments vs. wire transfers
Wire transfers and ACH transactions fall under the electronic funds transfer umbrella and are commonly used in business-to-business (B2B) commerce. However, significant differences exist.
The Federal Reserve Wire Network, not NACHA's centralized network, routes wire transfers. Funds arrive the same or the next day, whereas ACH payments through a TPPP might take up to three days. You can receive wire transfers from international customers, but in most cases, you can't use ACH if your client doesn't have a U.S. bank account.
Still, you'll pay a hefty fee for a wire transfer versus an ACH payment. It's also less convenient, so the ACH payment method is generally used more for B2B payments than wire transfers, which are better for high-value transactions.
[Read more: Mastering Mobile Payments: Top Credit Card Payment Apps for Entrepreneurs]
Benefits of ACH payments
Accepting ACH payments improves customer experiences while increasing operational efficiency. This payment method benefits businesses that handle paper checks, recurring payments, or invoices.
The advantages of ACH payments include the following:
- Low transaction fees: Compared to credit card processing, ACH payments save small businesses money. The savings add up to hundreds or thousands yearly.
- Better cash flow: Recurring billing and fast funding options keep income streams steady.
- Consistent payments: Credit and debit cards expire, whereas banking information only changes if clients close their accounts.
- Customer convenience: Consumers are familiar with ACH payments, so companies offering user-friendly payment tools can increase the use of this method.
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