ACH payment processing works via software applications that allow businesses to accept and make payments using the Automated Clearing House (ACH) network. The best ACH payment processing for small business owners includes electronic transfers from one account to another. ACH payments are a popular payment method for small businesses because they are convenient, affordable, and secure.
What is an ACH Payment?
In its simplest form, an ACH payment is a method of transferring funds electronically between banks. It doesn’t require a card network, paper checks, cash, or wire transfers.
There are two main types of ACH payment procession options: direct deposit and direct payment. A direct deposit is the preferred method for businesses making payments to employees or government payments to consumers, such as tax refunds. Direct payments refer to money sent from one person to another, online purchases, donations to charities or nonprofits, or paying a bill.
ACH payment processing is essential for small or independent businesses. It cuts out the card network ‘middleman’ and associated fees. An ACH Processor allows business owners control over the date and amount of money transferred. The payment failure rate is low, which helps eliminate late payments. Moreover, ACH software forms part of business automation, which saves companies time and money on financial admin.
How To Choose an ACH Payment Processing Company
As a small business owner, you may feel overwhelmed by the lineup of ACH payment processor options. Therefore, it’s important to note that not all ACH payment processors offer the same features.
When you compare each ACH transfer app, you must consider the features that make sense for your business. For instance, if you have a limited budget, opting for ACH software at a flat subscription rate with no extra charges may be the better choice.
If your business is new, you should look for an ACH processor with a point-of-sale (POS) system, reporting features, and exclusive ACH payment processing. This way, you won’t have to get different systems for payment collection processes, which can help you save money
Should you only process direct debits and credits, you need an ACH processor that integrates into your website. If you want an ACH merchant account, you should look for software integrating global currencies and supporting multiple payment types. Additionally, if you run a high-risk business, you need ACH payment processing including excellent security and fraud management tools.
With all the different features of ACH processors, it’s important to keep your business’s unique requirements in mind so you can choose the best system.
Benefits of ACH Payment Processing
Founded in 1974, the National Automated Clearing House Association (NACHA) has grown by leaps and bounds. ACH payment values reach trillions each year, with ACH payment processing steadily expanding its popularity. There are several benefits to using ACH payment processing software. These include the following:
1. ACH payments offer excellent security.
Paper checks attract fraud and are still the payment method that sees the most fraud attempts in 2023. Checks can be compromised or even lost, never arriving at merchants’ offices. Paper records also increase the risk of human error in businesses, while the inclusion of personal details makes checks vulnerable to tampering and forgery. ACH payment processing eliminates these risks.
2. ACH payment processing reduces errors.
ACH processing also reduces human error by automating several processes and eliminating the need to visit banks and other fi. The processing time is much shorter, saving time that employees can spend on more valuable tasks, like generating leads.
3. ACH processing is affordable.
ACH payments cost far less than traditional payments because of reduced fees, especially compared to credit card processing. It may seem like a minimal benefit when looking at each transaction individually. However, when you calculate your monthly or annual transactions, the cost reduction can be quite significant.
4. ACH software offers recurring billing options.
If you want to implement ACH payment processing for small business subscription-based models, you will be glad to know that ACH processors support recurring billing. Conventional, regular billing is expensive and often causes cash flow issues or results in unpaid invoices.
An ACH merchant account will put an end to these challenges. It will help you save on processing fees and receive bill payments on time.
5. ACH payments are convenient.
ACH software negates the need for checkbooks and provides options for one-time or recurring payments. It is the most convenient way to ensure all funds safely reach their intended destinations. Furthermore, online transactions shorten the overall processing time because banks prefer processing ACH payments over paper checks.
The 10 Best ACH Payment Processing Platforms
Here are some of the best ACH payment processing platforms for small business owners who want to speed up payments while saving time and money:
1. Payment Depot
Payment Depot is at the top of the list as it supports credit and debit card payments and ACH transactions. The platform offers a low subscription rate that starts at $79 per month, and all ACH processing rates stay at 1% with a cap of $10. This means all transactions over $1,000 only cost $10 each.
Payment Depot does not require a long-term contract, supports invoicing, and offers 24/7 customer support. The only cons that may impact some business operations are that Payment Depot does not incorporate a reporting dashboard, and the platform does not have a data exporting function.
2. Dharma
Dharma is one of the recommended ACH processors for startups. The platform offers an all-in-one payment system with e-checks and paper checks accepted. It also processes credit card payments. Additionally, Dharma provides options for automatic bill payments, discounts for nonprofit payments, business-to-business (B2B) payment processing, and month-to-month subscription billing.
Dharma comes at an affordable monthly cost and low transaction fees. Take note that you will need an ACH merchant account to accept ACH payments using the Dharma platform. There are also closure fees and virtual and mobile processing costs to consider.
3. Stripe
Stripe is known for powering online and manual payments. This fintech company also operates as an ACH processor. You can integrate Stripe with your existing online payment portal and use it to invoice your clients. Stripe is not a bank account or merchant service. It promotes itself as a third-party service that allows payments without having to open a merchant account at a bank.
Stripe for ACH payments is recommended for businesses that employ IT programmers who can customize the platform. If you choose Stripe for your business, keep in mind that the platform has experienced stability issues, and you may find customer support delayed
4. GoCardless
GoCardless is an excellent choice for businesses that strictly process ACH payments. It doesn’t support credit card payments and works according to two base transaction fees. These fees are for US and international payments. All US ACH transactions over $1,000 get an excess fee of 0.3%. International fees equal 2% + $0.25 (in the relevant currency).
A basic GoCardless account does not include a monthly fee, only transaction fees. Moreover, this payment processing solution includes an open API (Application Programming Interface) and supports over 200 business software integrations. An extra fee is applicable for higher transactions.
5. PaymentCloud
If you operate a high-risk business, like a casino, you should opt for an ACH processing service like PaymentCloud. This company specializes in high-risk transactions and can get you transacting securely within 48 hours. PaymentCloud offers multiple point-of-sale options, including in-person, online, and mobile. It can reprogram card readers and integrate with online store shopping carts.
The downside to using the PaymentCloud platform is that it is bespoke software that you can’t compare to other platforms. The company also does not disclose its payment options on its website or social media, so it is necessary to call them to discuss costs.
6. Square
Square is one of the best ACH processing options for small businesses. It offers a range of services, including ACH payment processing using Square invoices. The platform facilitates free ACH payment processing (credit cards) and free invoicing.
A basic Square account allows access to a POS system and standard reports generated through the dashboard. The free invoice feature allows unlimited estimates, quotes, invoices, tracking, and payment reminders. Furthermore, the basic plan is fee-less, with transaction fees at %. Unfortunately, Square doesn’t cap ACH fees and offers limited support hours.
7. Merchant One
Merchant One boasts a 98% approval rate and offers easy payment processing solutions for almost any business. Merchant One’s payment gateway is perfect for online (e-commerce) businesses and accepting ACH payments. The company does not publish its rates but does mention a monthly fee starting at $13.95. The platform offers an interchange-plus rate, invoice generator, and 24/7 support.
The downside is that you will have to sign a three-year contract, and Merchant One requires a termination fee for early cancellation. This may not be the best option for a business still trying to establish its ACH processes, especially considering that the cancelation fee may be as high as $750.
8. Stax
Stax is an ACH processor that works well for businesses that process over $5,000 in transactions per month. If you have recurring invoices, Stax provides the option to schedule them and send out automated reminders for payment. The platform accepts and processes e-checks, ACH payments, and more.
There are no contracts to sign, and the company is committed to next-day payouts. You can integrate Stax with other software and receive customer support 24/7. All subscribers get a free terminal or mobile reader. You also get access to digital invoicing and links for payment.
Pricing starts from $99 a month with sales limited to $500,000 per year. There is no markup on ACH and credit card payments, and no contract or setup fees are required. However, invoicing options only come with the mid-level plan, and the monthly costs are on the high side. Decide on this option after establishing your business needs.
9. Helcim
Helcim also does not require setup or monthly fees and offers a highly cost-effective markup on interchange-plus pricing. The platform does not cap fees, with charges at 0.5% + $0.25 or ACH payments. This payment structure makes it a viable option for companies with limited funds to spend.
This low-cost payment processor comes without long-term contracts, but the company does charge $5 per failed payment. Helcim automates recurring payments and includes a POS system and invoice generation. It even incorporates QR codes and SMS technology alongside payment links.
Helcim can work for most businesses that don’t fall within the high-risk category. The lack of capped rates and failed transaction charges may make it a less attractive choice.
10. National Processing
If you’re looking for affordable payment processing solutions tailored to your industry, give National Processing a try. All packages come with a low monthly fee and transaction fees. Like most other ACH platforms, this one allows once-off and recurring transactions. But it does charge a $25 setup fee.
Moreover, you are required to sign a contract for up to three years. National Processing is a merchant services provider that works with two banks, which means if you terminate your contract ahead of the due date, you will pay up to $595 in cancellation fees.
ACH Payment Processing FAQS
Q: How do small businesses process ACH payments?
A: Small businesses typically process ACH payments using a third-party ACH payment processor or ACH payment gateway. An ACH payment processor is a company or platform specializing in processing business ACH payments. Payment gates allow direct business ACH payments on websites or apps.
Q: What are the best practices for ACH payments?
A: Best practices include obtaining customer permission before debiting an account with an ACH debit. It is crucial to verify a customer’s bank account information and use a secure payment gateway. Furthermore, monitor all ACH payments for unexpected errors.
Q: How do I allow customers to pay by ACH?
A: You can allow customers to pay by ACH using third-party payment solutions (processors), a payment gateway, or manual ACH payments.
Q: How much does Stripe charge for ACH payments?
A: Stripe customers pay 0.80% for ACH payments with a $5 cap. The platform does not charge verification or monthly fees.
