When businesses choose to accept ACH payments, many do so because ACH payments are typically the lowest cost option for accepting electronic payments. Most ACH payments are billed using a flat fee of between 25 and 75 cents per transaction.
So, let’s compare a typical ACH payment (lets use a median 50 cents) with a typical credit card charge (lets use a representative 25 cent authorization fee + 2.5% of the total amount) for the same $500 transaction.
- ACH Processing Cost = $0.50 ( 1 transaction x $0.50 per transaction charge)
- CC Cost = $12.75 (1 authorization @ $0.25 + $500 x 2.25%)
- ACH Processing Savings = $12.25 per transaction
As much as we would love to open the flood gates to every business that wants to accept all forms of payment, our partner credit card and ACH processing partners control the underwriting and who gets approved to accept what. And, many times, we have merchants who can get set up to accept ACH payments and not credit card payments. Why? Among other reasons, ACH payments are typically accepted in smaller volumes by businesses because they are a lesser known form of payment. However, many of our merchants find them to be the lesser-known but optimal choice for their customers. Some find ACH processing so convenient and cost efficient that even with credit card processing, ACH payments become their primary form of payment acceptance.
Occasionally, a customer might feel a little pang of fear when providing his or her bank account number to a business. It’s as if those numbers were never meant to be uttered out loud. However, what many people don’t realize is your routing and bank account numbers are printed clear as day on the bottom of all your paper checks. For some reason, while we’ve been trained to not let our credit cards out of our sight, paper checks can go floating around and passed between many hands. So, whenever you leave your checks lying around (on the table, in your child’s backpack, in an overstuffed dropbox), you are actually more at risk than by verbally giving your account number to a business owner for ACH payments, which are encrypted and entered into a secure online system.
When businesses accept ACH payments, they are eliminating a lot of that security risk for their customers and themselves. After all, there is a lot of stress involved with storing paper checks at the office and then transporting them to the bank. Unlike cash, if someone broke in to the office or if an envelope of checks was lost, the business owner is not only losing X amount of money, but also exposing sensitive information about his or her customers. Your name, address, above-stated account numbers, and phone number in some cases are now out there in a stranger’s hands. This means you would need to be contacted and explained the bad news—which is bad for customer relations and the business’s reputation.
If you accept ACH payments, the account numbers are entered into a secure system and then encrypted during ACH processing. At this point, only computers transmit ACH payments data—which removes the risk of spying eyes and predatory fraudsters.