ACH Payments


ACH Payments

  • ACH: An electronic network for financial transactions in the United States that result in money being placed in the receiver’s account at the destination financial institution.  ACH Payments are electronic transfers from one account to another.

Increase Your Customer Base By Offering An Alternative To Credit Card Payments

Offering ACH (direct deposit) payments to your US customer base will greatly increase your online sales revenue. In 2008, US citizens made over 2.1 billion online ACH payments, accounting for an online payment industry worth almost US$1 trillion each year.

By offering ACH payments, your company gains an essential edge in the competitive online market and becomes accessible to millions of US citizens. ABA numbers are used for ACH transfers. ACH transfers are only available to U.S. contractors with U.S. bank accounts seeking alternative online payment options.

  • ABA Routing Number a.k.a. ABA Number or Routing Transit Number was developed by the American Bankers Association aka ABA in 1910.  The ABA Routing Number serves to identify the specific financial institution responsible for the payment of a negotiable instrument. Originally designed to identify only check processing endpoints, the ABA Routing Number has evolved to designate participants in automated clearinghouses, electronic funds transfer, and on-line banking. The ABA Routing Number has changed over the years to accommodate the Federal Reserve System, the advent of MICR, and the implementation of the Expedited Funds Availability Act aka EFAA and most recently, Check 21.
  • MICR: Magnetic Ink Character Recognition. The process used to read the numbers on a check. The MICR characters (0-9 and 4 special characters) are printed in special toner or ink. When the check is passed through a reader/sorter, it passes by two magnetic heads. The first one magnetizes the MICR character and the second one reads the (now) magnetic MICR character.
  • EFAA aka Expedited Funds Availability Act. (EFA or EFAA) was enacted in 1987 by the United States Congress for the purpose of standardizing hold periods on deposits made to commercial banks and to regulate institutions’ use of deposit holds. It is also referred to as Regulation CC or Reg CC, after the Federal Reserve regulation that implements the act.
  • Check21: The Check Clearing for the 21st Century Act (or Check 21 Act) is a United States federal law that allows the recipient of the original paper check to create a digital version of the original check, a process known as check truncation, into an electronic format called a “substitute check” thereby eliminating the need for further handling of the physical document.

ACH payments are easy to make, secure, and ensure the validity of all transferred funds. With three to ten day settlement and full transaction tracking, diversifying your payments with ACH will expand your online market and provide additional revenue for your ecommerce business.

ACH Payment Processing Benefits

ACH aka Automated Clearing House:

Transactions through the ACH network (an electronic network for financial transactions in the United States) that result in money being placed in the receiver’s account at the destination financial institution. Processing reporting to identify payment errors sooner

  • Diversify Payment Options To Attract More Customers:
    As in payroll direct deposits/electronic payments to contractors and vendors, etc.
  • Offer Payment Alternatives To Customers Without Credit Cards
  • Real Time Payment Processing:
    The act of Data Processing that appears to take place, or actually takes place, instantaneously upon data entry or receipt of a command. The processing of transactions the instant each is received by, or entered into, a computer system.
  • With Physical Checks Reduce Risks Associated:
    If the check is being mailed, it could get lost when in-route, since it takes approximately 3 days for a paper check to clear you face a much higher risk of an NSF aka Non-Sufficient Funds, then an ACH transaction.NSF aka Non-Sufficient Funds is a term used in the banking industry to indicate that a demand for payment (a check) cannot be honored because insufficient funds are available in the account on which the instrument was drawn. In simplified terms, a check has been presented for clearance, but the amount written on the check exceeds the available balance in the account.
  • Protect Your Credit Rating:
    Using ACH transactions allows businesses to make quicker, more secure debit and credit transactions, and allows for greater control and predictability of cash flow.
  • Reduce The Window Of Time For Acceptance For Check Payment

How Does ACH Payment Processing Work?

The customer makes a request to send money to a merchant, and asks for authorization.

The merchant authorizes the request, and provides written, digital or verbal authorization of the payment including ‘terms and conditions’ for the customer to accept.

The customer lodges their payment via the ACH, aka Automated Clearing House network, which sends the money to the RDFI aka Receiving Depository Financial Institution for processing.

  • RDFI aka Receiving Depository Financial Institution is a financial institution qualified to receive ACH aka Automated Clearing House entries. These institutions should abide by the NACHA aka National Automated Clearing House Association Rules. The Receiver’s depository institution that receives the ACH transaction from the ACH Operators and credits or debits funds from their receivers’ accounts.
  • NACHA aka The National Automated Clearing House Association manages the development, administration, and governance of the ACH Network. NACHA is the backbone for the electronic movement of money and data in the United States. The ACH Network serves as a network for direct consumer, business, and government payments, and annually facilitates billions of payments such as Direct Deposit and Direct Payment. Utilized by all types of financial institutions, the ACH Network is governed by the NACHA Operating Rules, a set of rules that guide risk management and create certainty for all participants.

The merchant receives their funds and sends goods/service to the customer.

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