Should I Have an ACH Account?
For most merchants, using their credit card merchant account has not only helped their business grow, but it has been the mainstay of their cash flow. For online merchants, not being able to accept credit cards is not an option. Another great option for merchants to electronically process consumer transactions is through ACH.
ACH is Automatic Clearing House and basically an electronic wire transfer system and the transactions are settled in much the same way that traditional paper check transactions are; meaning that the bank divides the batch submissions by the originator bank and sends them off to clear, and wit for the respective deposits. Unlike paper checks, ACH transactions are usually high dollar amounts and are popular with international merchants selling products or services to clients abroad. This usually works out well because of the time and risk involved with mailing funds. Internet merchants are believed to be particularly savvy when it comes to funds acceptance diversification. ACH has been around since the early 1970’s and has always been a risk for businesses to perform due to theft and fraud. Unfortunately criminals will always find a way into the most elaborate and secure funds transfer systems; however, this cannot stop merchants from looking forward to add ACH to their stable of acceptance venues.
When ACH was born, the US Federal Reserve offered help by way of offering electronics and computer systems to aid banking institutions deal with, organize and settle ACH transactions. In 1974 NACHA, which is the National Automatic Clearing House Association, to help establish rules and guidelines as well as regulate certain portions of the ACH industry. Today they operate and maintain their website which is www.nacha.org which offers news, information, resource links and statistics for merchants that are interested in ACH. Currently ACH transactions increase an average of about 15% each year, with a 13.4% volume increase in 2007. Due to the internet revolution, ACH has grown steadily and seems to show no slowdown in sight for the near future; however it is unclear today what the effects of a slow economy or recession will have on these transactions. It is possible that ACH transactions may spike in a slow economy because of the relative low cost of a per transaction fee, no discount rate and no chargeback risk. As with any avenue in business, industry professionals work to make their products and services more mainstream and a questionable economy just may be the way to accomplish that.
Setting up an ACH account is fairly simple. Many merchant service providers that set up and assist in the maintenance of merchant credit card accounts offer ACH set up services. This is great for one stop shoppers; however there are companies that specialize in ACH set up and servicing specifically ACH customers. The application process is very similar to credit card acceptance applications and there is usually a set up fee, monthly fee and transaction fee, which is the same for credit card accounts. A great money savings for merchants is that there is no discount rate involved. This means that there is no percentage of each dollar being processed taken out for the bank or processor. Transaction fees vary, but usually fall between $.25 and $1.00 per transaction. This can mean real dollars saved for certain industries, but it would be a hard sell for many merchants that benefit from the ease of credit cards and allot for those expenses. While it may not happen tomorrow, ACH is here to stay and enjoys steady growth in a fickle and ever changing marketplace. If you are interested in information on ACH accounts, checking with your merchant service provider is not a bad place to start.
Jennifer Loganathan is the President and CEO of Stradafee Limited. Stradafee is a leading international payments company based in New York. Stradafee is a retail and ecommerce payment processing provider specializing in international and Internet merchant account solutions. Stradafee also offers check processing, high risk merchant accounts and offshore merchant account options. Stradafee can help businesses of all industries and sizes. For more information on credit card processing and check processing please visit www.stradafee.com.
ACH is Automatic Clearing House and basically an electronic wire transfer system and the transactions are settled in much the same way that traditional paper check transactions are; meaning that the bank divides the batch submissions by the originator bank and sends them off to clear, and wit for the respective deposits. Unlike paper checks, ACH transactions are usually high dollar amounts and are popular with international merchants selling products or services to clients abroad. This usually works out well because of the time and risk involved with mailing funds. Internet merchants are believed to be particularly savvy when it comes to funds acceptance diversification. ACH has been around since the early 1970’s and has always been a risk for businesses to perform due to theft and fraud. Unfortunately criminals will always find a way into the most elaborate and secure funds transfer systems; however, this cannot stop merchants from looking forward to add ACH to their stable of acceptance venues.
When ACH was born, the US Federal Reserve offered help by way of offering electronics and computer systems to aid banking institutions deal with, organize and settle ACH transactions. In 1974 NACHA, which is the National Automatic Clearing House Association, to help establish rules and guidelines as well as regulate certain portions of the ACH industry. Today they operate and maintain their website which is www.nacha.org which offers news, information, resource links and statistics for merchants that are interested in ACH. Currently ACH transactions increase an average of about 15% each year, with a 13.4% volume increase in 2007. Due to the internet revolution, ACH has grown steadily and seems to show no slowdown in sight for the near future; however it is unclear today what the effects of a slow economy or recession will have on these transactions. It is possible that ACH transactions may spike in a slow economy because of the relative low cost of a per transaction fee, no discount rate and no chargeback risk. As with any avenue in business, industry professionals work to make their products and services more mainstream and a questionable economy just may be the way to accomplish that.
Setting up an ACH account is fairly simple. Many merchant service providers that set up and assist in the maintenance of merchant credit card accounts offer ACH set up services. This is great for one stop shoppers; however there are companies that specialize in ACH set up and servicing specifically ACH customers. The application process is very similar to credit card acceptance applications and there is usually a set up fee, monthly fee and transaction fee, which is the same for credit card accounts. A great money savings for merchants is that there is no discount rate involved. This means that there is no percentage of each dollar being processed taken out for the bank or processor. Transaction fees vary, but usually fall between $.25 and $1.00 per transaction. This can mean real dollars saved for certain industries, but it would be a hard sell for many merchants that benefit from the ease of credit cards and allot for those expenses. While it may not happen tomorrow, ACH is here to stay and enjoys steady growth in a fickle and ever changing marketplace. If you are interested in information on ACH accounts, checking with your merchant service provider is not a bad place to start.
Jennifer Loganathan is the President and CEO of Stradafee Limited. Stradafee is a leading international payments company based in New York. Stradafee is a retail and ecommerce payment processing provider specializing in international and Internet merchant account solutions. Stradafee also offers check processing, high risk merchant accounts and offshore merchant account options. Stradafee can help businesses of all industries and sizes. For more information on credit card processing and check processing please visit www.stradafee.com.
Labels: ACH, high risk merchant account, high risk merchant high volume merchant, Merchant Service Provider
posted by Stradafee at
7:23 AM
1 Comments:
Great post. My company offers companies this service, and this week is giving a discount in honor of earth day, please see below.
PaySimple, the leading provider of on-demand electronic payment solutions for small businesses, continues to honor its commitment to make the lives of small business owners easier by not only simplifying the invoicing and collections process, but also by empowering small business owners to do more to help the environment.
As part of this strong commitment to both entrepreneurs and the environment, PaySimple is waiving the initial merchant start-up fee--a savings of $199—as a one day offer to honor Earth Day, celebrated on April 22nd.
According to a study commissioned by the PayItGreen Alliance, if one in five households switched to electronic bills, statements, and payments, the collective impact would save 151 million pounds of paper, avoid filling 8.6 million household garbage bags with waste and avoid producing 2 million tons of greenhouse gas emissions. The alliance is asking financial institutions and businesses to encourage their customers to turn off paper bills and statements and make payments electronically, and PaySimple supports them in this quest with this special “green” promotion.
“Many small businesses are created to make a difference in their communities, but due to budgetary restraints, decisions are often made on a basis of what is ‘financially sound’ and not necessarily what is ‘environmentally sound’,” said Eric Remer, CEO, PaySimple. “For PaySimple customers, financially and environmentally sound choices are in fact one and the same.”
The PaySimple solution is an on-demand Software as a Service (SaaS) platform that enables small businesses to bill, collect, and manage their customer payments under one user-friendly system. The PaySimple solution includes recurring billing, email invoicing, web/telephone payments, ACH direct-debit, EFTs and direct deposits, credit card processing, e-check processing;, check conversion, and business software/shopping cart integration. Best of all, small businesses do not need any technology experience to use or customize the system. PaySimple designed a solution with the small business needs and budget in mind.
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