Accepting ACH Payments: Everything You Need to Know

Payment gateways are the backbone of modern electronic transactions, providing businesses with a secure and efficient means of processing payments. Acting as intermediaries between merchants and banks, payment gateways ensure the smooth transmission of transaction data while safeguarding sensitive financial information. An ACH payment works like a wire transfer, but between banks with no middleman. Using information, including the payment amount, bank account number and routing number, you can send or receive money between checking accounts. Usually, there’s a waiting period of two to three days, or even up to a week, for payments to process.

• If you use a bank within the U.S., it’s likely you can accept ACH payments.
• Understanding how transfers work helps you choose the best method for what you need.
• This pricing model is favorable if you charge customers large amounts on a regular basis.
• Cost is the main advantage of ACH transfers, especially when compared to a wire transfer.
• However, in 2020, this limit was raised to $100,000, making ACH payments more practical for large B2B payments, insurance claim payouts, and disbursement of disaster assistance funds.
• Instant Payout is an additional service offered by Wave subject to user and payment eligibility criteria.

When choosing an ACH payment processing company for your business, it’s important to consider pricing, integrations and features. There may be options that cost more, but the features make it worth it for your business, or a low-cost processor may not give you extras, but maybe you don’t need them. At Forbes Advisor, we take into account several factors of an ACH payment processing company to determine which is the best for specific businesses.

How to accept ACH payments in your small business

Grasp the meaning of APY in banking and CDs with our in-depth guide. Discover how APY impacts your financial choices and maximizes your savings. When you make an ACH transfer to someone else, you’ll usually need their account number, routing number, full name and account type.

ACH payments are a method of directly transferring money from one bank account to another without using checks, cash, credit cards, or wire transfers. While they can be used for one-time payments, they are more common for recurring transactions. Digital payment methods help businesses collect revenue more quickly and securely.

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ACH transactions are batched and processed at several set times throughout the day. Once an ACH transaction is processed, you should see the funds in your account within 2-5 business days. Maybe it’s those customers who place the same orders every month and have the same payment amount each time.

• With ACH, funds are transferred directly from one account to another and not routed through expensive card networks, which charge 1.3%-3.5% as a base fee.
• Instead, Stripe charges per transaction, with a higher online transaction fee than other competitors at $0.30.
• Fees are generally less than one dollar per transaction, and they are sometimes offered as a complimentary service.
• Although most people pay with debit or credit cards these days, automated clearing house (ACH) payment processing is still very much a viable option for payments.
• If you’re just getting started with an online business, we encourage you to be open to accepting as many payment methods as you can.

The ODFI, the institution where the request for funds originates, often receives the money in the end. Think of “originating” and “receiving” in reference to the ACH request, not the funds accepting ach payments themselves. The ODFI gathers all ACH transfer requests within a given period of time into a batch and sends the batch of files to an ACH operator, which then sends the files to the RDFI.

Conclusions on ACH payments

Here, we’ll discuss what B2B ACH payments are, how they work, and what you need to know before implementing them for your business. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.

Read through for a detailed explanation of this transaction type or use the links below to navigate throughout the text. The eCheck—AKA the electronic version of a paper check—is one common example of a type of ACH payment. And when using Routable for payables, you’ll have the option of integrating the platform with your existing accounting software.