With so many credit card options and payment apps right on our phones, it’s becoming increasingly rare to see people write personal checks. However, it seems that the business world has been slower to adopt 21st-century banking technology, which is why many businesses still rely on sending and collecting checks. To help grow your business and avoid payment hassles, we recommend learning more about how to accept ACH payments.

What are ACH payments?

What is an ACH payment, and how does it work? ACH stands for “automated clearing house” and is a centralized payment processing network used by financial institutions for sending and receiving money. With an ACH payment, funds are withdrawn directly from your business bank account and sent to your vendor’s bank account. Conversely, when you accept ACH payments, funds come from your client’s bank account and are deposited into yours.

With the ACH system, there’s no need to write a check or even go to your bank to perform the transaction. You can do it all from your phone, and the electronic process takes just a few quick steps to complete.

What are the benefits of accepting ACH payments?

Accepting ACH payments offers a number of advantages over receiving checks or setting up a wire transfer. These are a few of the top reasons to accept ACH payments:

  • Convenience: There’s no clocking in or out when you own a business, which often means business owners work a whole lot more than 40 hours a week to keep everything running smoothly—and worrying about getting payments from clients is one of the last things they want to do! Since everything is done electronically and accounts are easy to set up, the ACH system is arguably the most convenient payment acceptance method out there.
  • Affordability: Many financial institutions charge a small fee for ACH transactions, but compared to what you’d pay for a wire transfer, ACH payments are incredibly affordable. Depending on what bank the money is coming from, you might not get charged a transaction fee at all.
  • Speed: You can receive your ACH payments in as little as one business day. When you compare that to the time it takes to receive a check in the mail, ACH payment acceptance is a no-brainer.
  • Security: Perhaps the top reason to go with an ACH payment is that each transaction is incredibly secure. There’s no worry about checks getting lost in the mail or falling victim to wire fraud. Better still, each transaction is processed and verified through the National Automated Clearing House Association (NACHA).

Are there any downsides of accepting ACH payments?

ACH payment acceptance clearly has its perks, but like most things, ACH payments do have their flaws. Here are a few downsides your business may experience when working within the ACH system:

  • Delayed posting: As we touched on above, ACH payments typically take one or two days to process. While this is faster than a check, it’s slower than a wire transfer or accepting a credit card. Thankfully, same-day ACH payments are becoming more common, but they may require a higher transaction fee.
  • Insufficient funds: Since the funds come directly from clients’ bank accounts, they aren’t able to carry a balance like they would with a credit card. If there isn’t enough money in their account, your customers could get hit with a hefty overdraft fee and you won’t receive your payment.
  • U.S.-centric network: The ACH system is primarily used by banks in the United States. In fact, international transactions account for less than 0.5% of all transactions on the network. If you work with clients overseas, ACH payments likely aren’t your best option.

How to receive ACH payments

We already mentioned it above, but accepting ACH payments is about as easy as it gets. These are the four easy steps business owners need to take before they start banking using the ACH system:

  • Pick a provider: If you’ve already opened a business bank account, you’re likely already eligible to receive and send ACH payments. Just double-check that your bank is a part of the ACH system and provides this service to its customers. If you already accept credit cards through a third-party payment processor (TPPP), consider setting up an ACH account with them. A TPPP will charge a transaction fee, but it’s faster than going through a bank.
  • Register: You can skip this step if you’re going to accept ACH payments through your bank, but if you’re working with a TPPP, you’ll need to register your account. Thanks to new technology, this step shouldn’t take long at all.
  • Get payment details: Since you’re receiving money directly from a customer’s bank account when you accept ACH payments, you’ll need to get their account number and routing number for each transaction. These numbers are easy to find at the bottom of every check, so your clients shouldn’t have any issues providing this information.
  • Share banking information: You’ll also need to share your banking information with each client so they can transfer money to you. Remember, ACH payments are designed to be as secure as possible, so don’t worry about exchanging financial details with customers.

Is ACH right for your business?

We believe that the pros of ACH payment acceptance far outweigh the cons. However, we know that no two businesses are alike, so the preferred payment acceptance method varies from company to company.

If you need payments from clients as fast as possible, you should look into how long wire transfers take—they’re a very fast option. Your other best bet is having clients write checks or pay with their credit cards. Checks are slower to arrive but provide an easy way to document payments. And credit card payments allow customers to pay for high-priced goods or services without dipping into their bank accounts.

Get started with ACH payment acceptance

Regardless of your business’s size or the industry you’re in, now’s a great time to sign up with NorthOne to accept ACH payments. Our technology allows business owners to receive and send ACH payments from their phones from anywhere in the world. Plus, you can integrate your bank account with payment apps like PayPal, Stripe, Square, Toast, Venmo, and more, so you’re always ready to do business with your customers.