Do you collect recurring payments from customers or clients? Does your business accept large ticket purchases for products or services? If so, your business should be accepting ACH payments!
In an ever-changing world of financial transactions, ACH transactions play pivotal roles in streamlining payments, enhancing security, and advancing business operations. Whether you are seeking to automate your payments, improve cash flow, or enhance payment processes, understanding ACH payments is the first step towards success!
What are ACH payments?
ACH is a type of electronic payment that can be processed as a credit transfer or direct debit. ACH payments are sometimes referred to as eChecks, direct debit, or bank drafts.
ACH or the Automated Clearing House is the primary network used for processing electronic transactions between participating financial institutions. This network is run by the National Automated Clearing House. NACHA is an independent organization that is made up of a large group of banks and payment processing companies.
Types of ACH payments
There are two main categories of ACH transactions: direct deposits and direct payments.
A direct deposit is any type of electronic transfer made from a business or government entity to a consumer, usually for payroll, government benefits, tax refunds, and interest payments.
A direct payment can be used by individuals, businesses, and any other organization that is sending money. Examples would be sending money to a friend, purchasing a product or service, and paying bills. These are the transactions you will read about today.
How do I accept ACH payments at my business?
In a digital age where both convenience and security are paramount, ACH should be of high consideration. With a few simple steps, you can start accepting ACH payments at your business in no time!
- Set up an ACH Account with GMS
At GMS, we will guide you through all the steps needed to accept ACH payments at your business. To access the ACH network, you’ll need to provide some basic business documents to get your account approved. Contact us today to get started!
- Request Customer Authorization
You must accept permission from the customer to debit their account before accepting any one-time or recurring ACH payments. This can be done by collecting a digital or physical authorization form. GMS will provide you with a sample copy if you don’t already have one!
- Collect the Account Details
After the transaction has been authorized, you will need to make sure that all the account details have been collected; including the bank name, account number, routing number, and the customer’s name. You will only need to document this one time for recurring payments.
- Submit your Payment Details
Lastly, you will need to submit the ACH transaction to be processed through the ACH network. This will be done through a payment gateway, virtual terminal, software, or third-party method.
- Get Paid!
After the funds have been collected from your customer, your ACH credit will be automatically deposited into your bank account. The ACH debit normally takes 3-5 business days to fully clear depending on the type of transaction. ACH credits can be made same day, next day, or as two-day payments.
What type of Industries is ACH best used for?
ACH payments are often used by businesses to collect utility payments, monthly subscriptions, membership fees, tax payments, and charity donations.
Health and Wellness: Recurring monthly memberships are the prime business model for gyms and fitness centers. It is crucial to have a reliable and functional way of accepting payments. By accepting ACH payments, fitness centers can improve member experience, eliminate late payments, and save money!
Healthcare providers should also consider using ACH payments so they don’t have to spend their time dealing with late, missing, or bounced payments. Also, credit card numbers may change between patient visits, but bank account numbers normally don’t change.
Education and Recreation: Private schools, educational institutions, and recreational programs should take full advantage of ACH services. Parents and adult students are busy and won’t always remember to pay their tuition or membership fees on time.
Property Management: There is a lot to keep track of in the property management industry! Rent is a major payment every month and it can be stressful collecting it from every tenant on time. Cash and check payments carry the risk of getting lost or stolen, and credit card numbers can expire or change.
How much more convenient would it be to collect rent directly from a tenant’s bank account through scheduled payments? ACH transactions can make the process smooth and simple for both the owner and tenant.
Subscription Services: The subscription service model is becoming more popular. From media streaming to business software, these companies should take full advantage of recurring ACH payments. Most subscription services are sold online, so there is a significant amount of customer churn due to changed card numbers. With ACH, the payment process is seamless and processing fees could be eliminated.
What are the benefits of accepting ACH payments?
- ACH Payments are Cost-Effective
ACH transactions are often more affordable than credit card transactions. Funds are transferred directly from one account to another. This results in lower processing fees and businesses can reduce their payment processing costs.
- Increase your Efficiency with ACH Payments
Since ACH payments are electronic, they are faster and more convenient than traditional paper checks. This makes the payment process simpler and reduces the time it takes to cash a check or go to the bank. ACH transactions can also be put on autopilot! After you collect an authorization form, payments can be made as many times as needed.
- Enhance your Payment Security
ACH transactions are one of the safest methods for accepting payments. ACH payments are subject to strict procedures and encryption protocols, which makes them highly secure.
- Flexible Payment Options
Businesses can use ACH transaction for various types of payments, including recurring, one-time, billing, and payroll. Unlike wire transfers, ACH debit gives you full control over the exact transfer date, frequency, and amount.
- Higher Collection Rates
By accepting ACH payments, you can increase your collection rates by as much as 10-15%. No need to worry about funds not being available due to credit limits or expiring cards.
Lower your Processing Fees with GMS
With Gulf Management Systems, you can leverage our 30 years of payment experience to learn everything you need to know about ACH and how the process works. This way you can easily set up ACH processing at your business and take full advantage of all the benefits that come with accepting ACH payments.
At Gulf Management Systems, our goal is to save you as much money as possible when it comes to processing fees. With GMS, you can accept one-time or recurring ACH payments, increase your collection rates, and get discounted rates starting as low as 0.50 per transaction.
12 PCI Security Basics to Protect your Business
12 PCI Security Protections for Small Businesses What PCI security protections should I implement at my business? Is my business at risk? Data breaches can
Credit Card Processing | How to Calculate Credit Card Processing Fees
Understanding Credit Card Processing Fees Confused about your merchant statement? Don’t know how much money you’re paying for your credit card processing rates? GMS can
ACH Payments
Save Time & Money by Accepting ACH Payments! Accept one-time or recurring ACH Payments Increase your collection rates at your business Get discounted rates starting
