Here’s a step-by-step guide for businesses to set up ACH payments: 1. While it can feel overwhelming to get started with ACH, many organizations are already using it, and the ACH infrastructure is well set up for those who are just starting out. Most customers are used to instant settlements, so understanding ACH payments’ time frame can take some getting used to. KYC/AML Requirements:īusinesses must fulfill Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements before starting with ACH, which can take time and effort. The most common risks and liabilities associated with ACH are: Insufficient Fund Returns:ĪCH payments don’t settle immediately, so purchases made without sufficient funds can go unnoticed until rejected by the ACH network. Drawbacks of ACH PaymentsĪCH is among the safest payment rails available, but that doesn’t mean it comes without risk. Safer from Fraudulent Activities:ĪCH has the lowest fraud rate among major payment systems (averaging only $0.08 of fraud for every $10,000) representing only a fraction of 1 percent of the total value or number of all payments in the U.S. Other payment methods like credit cards and wire transfers often need information to be repeatedly entered for payments, which increases the chances for errors and returns. Fewer Errors and Returns:īank account information must be entered only once to link an account for ACH payments, reducing the chances of errors. On average, a bank account is held for 14 years compared to only 3 years for a credit card, making the bank account a more stable payment method. High Transaction Success Rate:ĪCH reduces payment churn as customers use their bank account rather than a credit card. For instance, for a $500 transaction processed through Stripe, you could save over $10 by choosing ACH over credit cards.įor businesses with high-volume transactions, such as those that process monthly billing cycles for their customers, using ACH instead of credit cards can provide significant cost savings. Credit cards and wire transfers, ACH fees are significantly lower.
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