Payment Processing and ACH Services Guide

Setting up direct payments to or from your bank account can help your small business run smoothly. Read this guide to find out more about ACH services and how the ACH network can help your business prosper today.

ACH payment services is an acronym that stands for Automated Clearing House payment services. The Automated Clearing House service is a network method for transferring money between banks electronically. Nacha, an organization that used to be called the National Automated Clearing House Association, governs the Automated Clearing House network. Nacha ensures that all payments made through this network are secure and properly go through. 

The ACH service is a primary tool used by companies all over the country to make large and small transfers between banks. In 2021, about $73 trillion was mobilized on the ACH network, and these payments were made between businesses, by customers, by the government, and even in international transactions. Here’s how you can include your business in this extremely productive business tool. 

How to Receive and Send ACH Payments 

When utilizing the ACH network for payments, it is important to know the different options you have for sending and receiving money on the network. There are two main types of payment methods when utilizing the ACH network: direct deposit and direct payment. The direct deposit method is generally utilized for payroll payments, tax refund “checks,” distribution of government benefits, or any payment made from institution to customer or individual receiver. 

The direct payment method is broader and allows for the transfer of payment between individuals, between organizations, or from individuals to organizations. This method is utilized during purchase of products, to send money between friends and family, or for bill payments. The direct payment method allows for two types of payment transfers within its umbrella, including direct debit and direct credit. 

What you Need to Know about Direct Debit and Direct Credit

With direct debit, you as a customer sign an agreement allowing a business or company to take funds out of your account to pay for a product or service on select days and times. This is a passive type of payment and allows you to pay for something over time without worrying about initiating the transfer manually. On the other hand, with direct credit payments you as the customer must initiate a transfer to a company, business, or individual to pay for a product or service or to send money. 

To set up the option for direct debit ACH payments for your business, or to utilize the ACH network to send direct credit payments, you must have an established bank account first. Then you will have to locate an ACH network provider to set up your ACH payments and choose the method of payment you would like to utilize. In this process you fill out forms with your information and agree to the terms and conditions. 

Best Payment Processing Services 

Whether you are looking to set up the option for direct debit ACH payments for your business, utilize direct deposit for your payroll, or send individual transfers utilizing the direct credit method of ACH payments, there are service providers ready to help you send and receive bank transfers today. Here is a list of some of the best ACH service providers on the market today. 

• Stripe Stripe is a platform that offers a variety of payment services, and flat rate pricing for their ACH payments. For direct debit transactions they charge .08% of the payment up to $5. For their direct credit transactions, they charge a flat fee of $1 per direct payment. For this platform however, you will need to employ an IT professional to integrate it into your company’s payment service, and it is not available for high-risk enterprises. 

• Square Square is a great option for small business owners or individual freelancers. It allows for debit and credit card payment services, but the ACH payment service is only offered through an invoice system. There is no monthly cost to have an account with Square but each ACH payment costs 1% of the total payment amount to process. Additionally, payments made through the ACH service will take up to 5 business days to transfer. 

• Stax by Fattmerchant Stax offers ACH payment services through a monthly subscription, starting at $99 for their Growth Plan. Each ACH transaction will be charged 1% of the transaction amount up to $10. This is a great fit for companies with a large amount of ACH payments processing every month, because Stax has a relatively low fee per transaction and will charge more for the monthly subscription depending on what kind of plan you are looking for. 

• National Processing National Processing is a cheaper option for your business with a $15 a month account membership fee for ACH processing and $.48 flat rate fee for each ACH transaction. 

• Payment Cloud Payment Cloud offers ACH processing for high-risk enterprises and can get your ACH services running for your business in 48 hours. Payment Cloud offers accounts with no set-up fee, and they promise reasonable fees per transaction, however they do not disclose their fees publicly. 

How Small Businesses Can Benefit from ACH Services 

Your small business can benefit from setting up ACH services in your payment department. ACH services provide smooth payment processing for payroll employees. If you run a freelance business or are a paid contractor, you can set up bank to bank payments through ACH invoice options with certain providers, which can provide faster payment options with less fees. 

ACH services can also help you set up smoother payment options for your customers if you are providing high end or recurring services or products. If you are offering a monthly shipment of your product, you can provide your customers with the option to set up automatic payments through the ACH direct debit service option. This way, every month your customer will receive their service or product without having to worry about initiating a transfer. This type of payment method can be helpful if you are offering a food delivery product or service with your small business. 

Electronic Check Payments and Online Bill Paying Services 

There are many different types of payment services that one may be seeking. Some types of services involve using a check electronically. While there is normally a small fee for electronic check payments, it is normally minimal. Electronic Check Payment services allow for a payment to go through faster. The average pricing for electronic check payments averages around $0.49 per transaction. In other instances, there is a flat fee for ach payments such as electronic checks. Providers such as Stripe, Quickbooks, Meliopayments, Tipalti and more.

Bill pay services are another way to make sure a payment is sent electronically. While most utilities and monthly expenses require a payment on time, you are never able to know exactly when your check will be cashed. With bill pay services, your payments to utilities and other monthly expense payments are made electronically. You no longer have to worry about when a check is cashed or if the payment arrived in time. Most bill pay services are able to process an electronic payment in less than 1 business day. Some common online bill pay services include Bill.com, Ramp.com, TheBalance.com and so many more to choose from. Pay rent, taxes, utilities fast and easy.