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How to accept ACH payments online

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Ryleigh Stangness | August 29, 2023

“Learn how your business can accept ACH payments online and tap into savings.”
11 min read
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    What is an online ACH payment?

    ACH transactions (automated clearing house payments) are simply another method to transfer funds. They are a form of electronic payment, or electronic fund transfer (EFT), made directly from one bank account to another through the ACH network. The automated clearing house network that ACH payments travel through facilitates these pre-approved bank-to-bank moves. Although not as snappy as credit cards, ACH keeps chargeback risks low and has the added bonus of cost-effectiveness (lower payment processing fees).

    There are many ways to accept ACH payments (ACH debit) using various ACH payment processing tools — including ways to set up recurring payments. We will cover those in this article, plus our top tips on how you can use ACH payments as a more affordable method to receive payments and free up cash flow, as well as optimize some of your business operations as a whole.

    How do ACH payments work?

    P.S. Here is the spoiler: Most ACH payments are made online.

    This is simply because they use bank account numbers rather than debit or credit card payments, which could be in-person or online. Thus, an ACH transaction requires a little more administrative work up front to obtain the bank account details, which makes it a little more impractical for one-time in-person payments. For instance, paying with your transit number and account routing details for your morning coffee isn't exactly practical, even if it does save your favorite local barista a couple of dimes in processing fees.

    So, as you can imagine, ACH payments are typically reserved for larger purchases, where the processing fees might be higher. Or for recurring payments, so that once you set up payments to be pulled from your customer bank accounts, you won't have to think about it again. P.S. This is one of the advantages of ACH payments vs. credit card payments since the payment details don't typically expire unless your customer's bank account is closed.

    In order to accept ACH payments you will need your customer's banking details In order to process ACH payments, funds are typically pulled or pushed from one bank account to another through the ACH network. When funds are "pushed," this is typically an ACH credit vs. an ACH debit payments which is "pull". Most of the time, businesses looking to receive payments will be looking for ACH debit transactions, whereas ACH credit will be for things like payroll and direct deposit.

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    Why should my business accept online ACH transfers?

    There are pros and cons to any payment method, such as wire transfers, credit card payments, cheques, and even cash. It's important to note that ACH payments aren't right for every type of transaction or every business. However, there are some impressive benefits of offering ACH. If there are opportunities for a natural switch to ACH payments for your customers, here are just a few reasons you might want to consider offering ACH transfers instead:

    Lower processing fees

    ACH payments typically range in cost from a lean 0.5%+25 to 1.0% + $0.75, depending on your payment processor, and are often capped at 5$. Compared to credit card payments, which often have a 2.5%+ fee plus processing costs, ACH payments are often less than half the cost.

    ACH payments are much more affordable compared to credit cards

    Lower likelihood of fraud and chargebacks

    Since ACH payments involve sharing intimate bank details, similar to a VOID cheque, they're not as vulnerable to theft as physical cards or breached data. NACHA's security measures, like bank verification, provide extra safety for ACH debit payments. Considering chargebacks can rack up $15 in fees plus potential losses from credit card fraud, the added ACH network security is a nice bonus. Plus, it's easy to trace an ACH transaction, so you and your customer have peace of mind knowing the funds are secure, and your cash flow won't be interrupted.

    Easier maintenance for recurring payments

    Switching to ACH payments from credit cards can be a game-changer in terms of hassle and maintenance- especially for subscriptions! You know how annoying it is when your favorite streaming service suddenly stops working because your credit card expired? You have to track down your wallet, pull out your new card and punch in the details using the remote and janky keyboard on the screen ((usually with more than a few typos and sighs of frustration as you find the backspace button). With ACH payments, not only does it save you from tracking down your customer's new credit card details, but it helps prevent any service disruptions for them as well.

    Think of it like setting up a direct deposit for your paycheck – once it's done, you're good to go without worrying about expiry dates. So, let's say you're subscribed to a meal kit service and paying with ACH. Your weekly food fix stays uninterrupted, and you're spared the frustration of re-entering credit card details every time your old card gets replaced. No more scrambling to update info, no more missed letters in the mail or buried emails asking your customers to update their info. ACH payments keep the show running smoothly.

    Reduced failed payments

    This point goes hand-in-hand with the point above, but think about how often credit card payments don't go through for various reasons, even when your customer's bank account details and card payment information are up-to-date. It is far more likely that your customer has funds in their account than their credit card to have reached its limit, whether for transactions, transaction amount, or credit limit. Furthermore, since credit card transactions tend to be a little riskier than ACH payments, credit card networks and financial institutions are more likely to flag a transaction for fraud and not authorize the payment, especially in the case of a larger transaction amount which is also a great opportunity to lower your processing fees with an ACH payment.

    Ways to accept online ACH payments

    If you're looking to accept your first ACH payment or direct payment in general, here are the steps you will need to do to get started:

    ACH payment processing with a laptop

    1. Find a processor that suits your needs and offers ACH payment processing

    Your payment processor can coordinate payments through the automated clearing house just as easily as a Visa or Mastercard transaction. However, since an ACH payment will need to go through a different network than credit and debit transactions, which is easy enough to do for a seasoned processor, you'll want to make sure they do offer ACH debit transactions. You'll also want to determine how much ACH payments cost with their pricing model.

    For example, some payment providers will charge you a flat rate no matter the transaction volume, while others, like Interchange Plus providers, will give you the interchange rate and a small markup or a capped fee, whichever is lower. Either way, an ACH transaction is cheaper than paying via credit card; however, it's good to research your options. Plus, while their rates may look good upfront, be sure to scout for hidden and extra fees and lengthy contracts before you lock yourself in.


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    2. Integrate ACH payment authorization into your existing checkout process

    Accepting online ACH transfers is simple and intuitive with the right payment processor and tools.

    Tools that make the most sense to accept ACH payments with include:

    • Invoicing
    • Recurring billing and subscriptions
    • An online checkout
    • Business Website where customers can save checkout details for future transactions
    • Payment requests.

      Often, the most disruptive part of not only offering ACH payments but getting your customers to use it is incentive, ease, and education.

    Why? Well, while it's cheaper for you to have your customers pay with ACH transfers, it is a bit of a hassle for them to track down their banking details when they could just as easily pay via credit card, which is often preloaded with a third party app or saved on their browsing device. They might not be familiar with this payment method either, so communicating incentives to use ACH payments is a great strategy for increasing adoption.

    Helcim ACH payments

    When it comes to ease, ACH transfers can be seamlessly integrated into your existing checkout processes, especially for online transactions. For new customers, it's as easy as visiting their online bank accounts to copy their bank account details and pasting those into an online form similar to the required fields for a credit card transaction.

    You'll need to include an authorization form in there somewhere, whether you send out a separate form via email or it's built into the payment tool they are interacting with to fill out their payment details. Once your customer has provided their account details for funds to be automatically pulled from their checking or savings account, your payment provider will need to check with their financial institution for authorization. Once approved, your payment provider will pull the funds and deposit them into your merchant account- it's that easy.

    3. Give your customers a reason to pay via ACH transfer

    While the real benefit of ACH payments to your business is lower processing fees, there are ways to incentivize your customers and make it easy for them to use an ACH transfer the next time they pay.

    One way to prompt your customers to use ACH transfers over credit card transactions is to offer a discount on ACH transactions or impose a convenience fee for using a credit card.

    Once again, communicating this to your customers and how, by using ACH processing, they are supporting your business by helping to reduce overhead costs, they may be more willing to take the extra few steps to peel their bank account details from their online banking. Plus, it's just as easy for your customer to opt-in to save this information for any future ACH transfers, which makes sense if you typically offer recurring billing. When it's cheaper for your customers, AND it's easy for them to save it for future transactions through a card vault? Done and done.

    Simply turn on ACH payments with Helcim and save

    With Helcim, it's easy to accept ACH payments. You can collect ACH Payments using built-in tools free with your account.

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    ✓ Online Invoicing ✓ Recurring Invoicing ✓ Subscription Management ✓ Virtual Terminal ✓ Payment Requests

    Helcim will automatically generate payment agreements for customers to authorize, and you will receive the funds directly in your bank account within 3-4 business days. It's that easy!

    P.S. You can also toggle on Helcim Fee Saver for tools like invoicing to prompt your customers to pay via ACH or accept a convenience fee for paying via credit card, saving you money on processing fees.

    FAQs

    What happens if an ACH transaction is not authorized?

    Once you have authorization from your client or customers and you've sent their banking details to your payment processor or financial institution, the transaction will need to be verified through the ACH network. If the payment is not authorized, your payment processor will receive a decline code. This could be due to various reasons, although it is much less common than failed credit card transactions, including insufficient funds, suspected fraud, or the customer has reached out to cancel the transaction and revoke their authorization.

    What is the best way to take ACH payments online?

    The best way to take automated clearing house payments online is to use a payment processor that offers seamless integration tools, allowing you to accept ACH payments quickly and efficiently. With Helcim, you can easily toggle on ACH payments payment methods through our user-friendly dashboard to allow customers to pay with ACH using tools like invoicing, subscriptions, payment pages, and the virtual terminal.

    How long does an ACH transfer take to be deposited?

    You should budget for 3-5 days, but yp. Although accepting ACH payments are not quite as fast as credit cards, they have a higher rate of success and lower rates of fraud. Plus, they have lower payment processing fees.

    How can someone pay me via ACH?

    You can either have your business set up to receive direct payments (ACH credit transactions) or pull funds from customer's bank accounts (ACH debit) by having them provide their banking details. With Helcim, you can automate ACH transfers with tools like invoicing, recurring billing, and subscriptions or take one-time payments (great for larger B2B transactions) through tools like the Virtual Terminal.

    Is ACH the same thing as online bill payments?

    ACH processing is a method of electronic payments that customers and businesses can use to pay their bills online. There are typically two methods available to customers to pay online or use for subscription services and products such as gym memberships, streaming services, and monthly subscription boxes: ACH bank transfers, which use your bank account details and pull funds directly from your checking or savings account, or credit card which is charged to your credit card balance.

    Why is my ACH payment taking so long?

    ACH payments typically take 3-5 days to be deposited. If you are expecting a payment and it has been longer than five business days, contact the payer and ask them for an ACH trace I.D. lookup. You can pass this on to your payment provider to see if they can trace the ACH transaction for you to see what is happening within the ACH network.

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