ACH payment processing is a type of electronic funds transfer (EFT) that allows businesses to collect payments from customers via the ACH network. This network is used by financial institutions to process transactions between banks and other financial institutions, including direct deposit and direct debit transactions. Payments processed through the ACH network are typically settled within one to two business days.

ACH payment processing can be used for a variety of payments, including one-time or recurring payments for goods and services, bill payments, and government benefits. Businesses that process ACH payments typically have lower processing costs than those who process credit card payments, as there are no interchange fees associated with ACH transactions.

To process ACH payments, businesses will need to set up a merchant account with a payment processor that offers ACH processing services. Once the account is established, businesses will be able to collect payments from customers via the ACH network.

When a customer makes an ACH payment, the funds are transferred from their bank account to the merchant’s account via the ACH network. The funds are then settled in the merchant’s account, typically within one to two business days.

ACH payment processing is a convenient and cost-effective way for businesses to collect payments from customers. To get started, businesses will need to set up a merchant account with a payment processor that offers ACH processing services.

How to set up ACH Payment Processing?

There are a few things you need in order to start processing ACH payments:

  • A U.S. bank account
  • An ACH-enabled merchant account
  • A payment processor that offers ACH processing services

If you don’t have a U.S. bank account, you’ll need to open one before you can start processing ACH payments.

Types of ACH Payments

There are two types of ACH payments:

Debits: ACH debits are used to collect one-time or recurring payments from customers. When a customer makes an ACH debit payment, the funds are transferred from their bank account to the merchant’s account.

Credits: ACH credits are typically used for direct deposit payroll payments. When an employer makes an ACH credit payment, the funds are transferred from the employer’s account to the employee’s account.

Advantages of ACH Payment Processing

There are several advantages of using ACH payment processing:

  • ACH payments are convenient for customers as they can be made online or by phone.
  • ACH payments are typically processed within one to two business days.
  • There are no interchange fees associated with ACH payments.
  • ACH payment processing can save businesses money on credit card processing fees.

Disadvantages of ACH Payment Processing

There are a few disadvantages of using ACH payment processing:

  • ACH payments may take a few days to process, which can be a disadvantage for businesses that need access to funds immediately.
  • If an ACH payment is returned, it can take a few days for the funds to be refunded to the customer.
  • ACH payments may require special software or hardware, which can be a cost for businesses.