Next to cash, traditional credit cards and debit cards have become the most popular form of payment method. One can assume that the number of transactions for debit and credit cards will only continue to grow at a steady rate in the years to come.
With the popularity of traditional credit and debit cards, why then are businesses exploring other methods for making and receiving payments?
This is due to the high processing cost associated with each transaction when carried out with a traditional credit or debit card. This is where an Automated Clearing House (ACH) transfer comes in handy. Below are some reasons that make ACH a superior option for businesses:
Security is Important
ACH payment processors mitigates some of the most common fears about using checks as a payment method. Checks are vulnerable to being misplaced and to signature forgery. ACH transfers are direct transfers that eliminate intermediaries. Because your customer could be hesitant to provide their bank account details, ACH’s payment processors carry out two-way micro validation to confirm the authenticity of the two parties involved. This verification ensures that the account information entered is accurate and there are no transaction blocks to the account, making this payment method highly beneficial for businesses.
Decreased Transaction Fees
One of the biggest attractions to ACH transfers is the low processing fee when compared to checks or credit cards. The administrative procedures are somewhat complicated with check payments, therefore average expenses are higher because, this can include: printing, payment initiation, authorization, signing, mailing cost and time spent. With ACH processor, funds get transferred between the two bank accounts through a clearinghouse this keeps the transaction cost minimal.
Keeping It Simple
Money transfers are made simple by ACH because it doesn’t involve the cutting of checks. ACH can benefit both parties in a transaction, the payer and the business. As a payer, you can say good-bye to bulky checkbooks and for businesses, it allows them to give customers the flexibility to make a one-time payment or set up recurring payments with ACH. Since the transaction takes place between two bank accounts, ACH saves you the trouble of having to follow up with customers on payment failure due to card expiry.
Effective for Recurring Billing
ACH is ideal for businesses that run on the subscription model for example, because this allows them to accept payment in the most cost effective way by saving them money on transaction fees. The more transactions these businesses make, the more transaction fees they are charged, and the more money they lose. And therefore ACH payment method is the ultimate choice.
The time it takes to settle payment with an ACH provides a happy medium between checks and credit cards. A check can take up to five to six business days to clear, whereas an ACH settlement can be completed in about three business days. NACHA (National Automated Clearing House) the electronic payments association has recently approved an operating rule that will make same day ACH transfer a reality. Businesses now have improved workflow efficiency, flexibility with payments, and quicker access to funds.
With a better understanding of ACH’s advantages it is time to stop cutting checks and make the switch. ACH is very user friendly and will save your business money in the long run. Businesses can now apply these savings in other aspects of their business operations as well. Switch to ACH and carry out your financial transactions in a smarter and brighter way.
Please visit www.ach-pay.com for more information on ACH transfers.