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What Is ACH Payment Processing?

What’s the easiest way to move money between banks, without the use of checks, cash, or credit cards? Three simple letters: ACH. And ACH is quickly becoming the most loved payment types by businesses across the United States.

What is ACH processing?

ACH (Automated Clearing House) is a network that coordinates electronic payments and automated money transfers. 

Chances are, you may be using ACH without even realizing it. If you get paid via direct deposit, that’s a form of ACH transfer. Paying bills online directly from your bank account, either one-off or recurring is another form of ACH transfer. 

ACH gives businesses the option to pay bills electronically. Instead of a check, which can take a few weeks to be deposited in the bank, ACH transfers with Bambora take roughly four business days to complete.  

Check out the video below for an overview of ACH payments:

 

Why use ACH?

While there are many reasons to use ACH, businesses are leaning towards this payment method for: 

  1. Lower Processing Fees: ACH costs less than any other payment type.
  2. Inclusivity: Allows your customers to accept funds from those without a credit card.
  3. Recurring & Stand-alone payments: Perfect for regular payment intervals or one-off transactions. 

How does an ACH payment work?

The ACH network is a batch processing system that banks and financial institutions use to aggregate millions of payments a day, and get them ready for processing. 

There are two types of ACH payments; debits (direct payment) and credits (direct deposit). 

Debits: Commonly used for subscription or recurring billing, ACH debits can be used to pay bills or invoices online through a bank account.

Credits: The opposite of a debit. With ACH credits, money is deposited into a bank account, for example a refund or payroll.

An ACH debit “pulls” money from one bank account, and the ACH credit “pushes” it into another account. This push-and-pull system makes sending payments quick and painless. 

Is a holistic payment offering the solution you’ve been looking for? Incorporating ACH into your software can do just that. Visit our Billing & Transfers page to learn more about the benefits of ACH.

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