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 Beneficial for Americans and American Business

In California in the early 1970’s, several banks in conjunction with the regional Federal Reserve office in California began brainstorming to find a safe and secure way of transferring funds electronically between different financial institutions. Their hard work paid off with a new network labeled the Automated Clearing House coming online in 1972. Other institutions across the nation were motivated by the Californian’s success, forming their own regional Automated Clearing House networks to deal with paperless transactions in their individual states. The natural progression of these separate efforts came to its fruition in 1974, as a concerted effort of individual ACH organizations formed the National Automated Clearing House Association. The main goal of this association involving all regional ACH operations was to successfully combine them into a national network of automated clearing houses. In 1978, their goal was realized when financial institutions across the nation were securely electronically linked.

From its humble grass roots beginnings in the early 1970’s, the ACH has grown into the largest network of its kind in the world. It has truly revolutionized the way Americans and American businesses do business, providing all with the peace of mind that all transactions are made securely and safely between institutions. But what began as a way for banks to communicate with each other has bloomed into so much more. Now, practically all Americans rely upon ACH in fulfilling a financial need each and every month, if not daily. If a worker gets his or her paycheck directly deposited into a checking or savings account, this is done through an ACH transaction. April marks a time of increased ACH transactions, as it is the time of year Federal Tax Return monies are directly deposited into taxpayers’ accounts. Social Security benefits are also tendered through ACH transactions, as well as most all government benefits and payments. Many computer-savvy Americans have adopted the paperless option when paying their monthly bills, with most providers (utility, cable, mortgage providers, etc.) allowing for this time and paper saving feature. For online merchants, the ACH has proven essential in their acceptance of electronic payments and has proven a boon to online merchants in the United States. Nearly all electronic payment providers work with the ACH in order to provide protected gateways for the merchants they represent. Providers like New York’s Stradafee, effectively represent their customers by keeping up with all ACH developments, following guidelines implicitly so that their clients can keep their efforts focused on the cultivation and improvement of their individual businesses. The ACH and the network it provides has truly become an integral innovation contributing to smooth operations of commerce in America today.

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 electronic payment provider specializing in merchant accounts. Please visit www.stradafee.com for more information.

Accepting Online Checks is Advantageous

Qualifying for a checking account is one of the easiest and first financial endeavors for developing credit. Many consumers, Americans and otherwise, acquire their first checking account in their early teenage years, as a gateway for cultivating good fiduciary judgment, often set up by parents or guardians. As more and more Americans especially are grappling with overwhelming credit card woes, consumers are turning to checks, paper and paperless, to pay for their purchases. As an online or brick and mortar retailer, the ability to process and accept checks is essential for the prosperity and growth of your business.

According to recent research, half of the shopping public in the United States are not able to qualify for a credit card. In fact, a recent survey of checking account holders in the United States showed that only one in four were in possession of a credit card that was eligible for a transaction because of available credit. Of the billions of (cashless) transactions that are made each year, nearly 60% are made with checks. The number of transactions made with checks instead of credit cards continues to grow each and every year. Retailers who desire to remain competitive owe it to themselves to be able to accept and process all forms of payment, especially those by checking account holders.

Not only is it beneficial to accept checks based upon the sheer numbers of check purchases, the processing fees administered by most electronic payment companies when processing checks is a fraction of the cost when compared to credit card processing fees. The cost to process a check invoice is 24% of the accessed cost to process a credit card purchase of an equal amount. Merchants are charged much smaller fees on check purchases so more of the purchase price assumedly goes to profit rather than in the electronic payment company’s pocket.

Most processing companies provide the merchant with added benefits when accepting checks as well. Online check processing allows for the automatic deposit of funds into your business checking account allowing for more rapid and immediate access to funds, mostly within 48 hours. A reputable processing company like Stradafee will provide your business with all the software needed to provide an electronic gateway to safely and securely process your customers’ checks. Using a process known as Automatic Check Handling (ACH), checks are validated safely and quickly, allowing you and your customers to interact with the highest amount of security and confidence. By accepting checks, you are making your business attractive to a larger amount of customers, and your profits will undoubtedly grow due to new opportunities for sales.

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 merchant account provider specializing in credit card and check processing solutions. Please visit www.stradafee.com for more information.

HOW TO OBTAIN A HIGH VOLUME MERCHANT ACCOUNT

A problem a lot of merchants have is obtaining a merchant account to process their credit cards and ACH check processing. This is nothing new, as new businesses sprout up every day, and these days, you need to accept credit cards, especially if you want to stay in business. Let me clarify that the problem isn’t in a vendor getting approved for a merchant account, but vendors that need to process card not present transactions, and/or merchants needing high volume merchant accounts not getting what they need from domestic banks and processors. To banks and processors, these high-risk categories are known as MOTO (mail order, telephone order) and online (internet) transactions and are clumped into one category.

The problem lies in the fact that most domestic processors and banks put these merchants in a high risk category, often capping their monthly volume, leaving the merchant in a position where they cannot grow their business. For this reason, these merchants are turning to merchant service providers to secure high volume merchant accounts.

Securing a high risk merchant account is important to the growth of your business and in some cases, detrimental to you if you can’t accept credit cards or ACH check transactions. Working with merchant account providers that specialize in securing high risk accounts for merchants is extremely important, as many times your local bank or current processor will take the business but with stipulations and unreasonable terms.

The next step is working with your merchant service provider to establish your processing capabilities. Does your business require high volume or even unlimited processing capabilities? Do you have volume caps? Most importantly, do you want a domestic or off-shore merchant account? Sometimes, securing a high or unlimited volume merchant account can be obtained by a domestic provider, but if you’re a high risk merchant, that may mean going off-shore. Now that it has been established, that going off shore may be the way you want to go, you will need to select a merchant service provider that specializes in off shore and high risk and high or unlimited volume merchant services.

Working with the types of merchant service providers starts with an application, similar to your domestic merchant application with basic business information including current and projected sales volumes if and when a high risk, high volume merchant account is established. Once your application has been processed, the bank will assess risk. The risk they take on you is dependent on several factors, one of which will be projected volume. They may need to know that if you go out of business, and have received payments and have to cover your chargebacks, that the risk will be as low as possible for them. Chargebacks due to consumer satisfaction or fulfillment issues also have bearing on the type of limits and conditions on your new account. Yes, there are safer products and services for banks to process merchant cards and online checks for.

More commonly and as stated in the first paragraph, high risk merchant accounts are when you the merchant processes a credit card for a transaction when it or the holder is not present to sign the sales slip. These are MOTO (mail order, telephone order) or internet sales. These types of transactions riskier to banks due to fraud and stolen credit cards as well as identity theft. A common misconception is that a high risk merchant account is obtained for illegal, black or gray market goods or illicit services. This is not true. Banks research merchants thoroughly and do not accept any risk at all on them, leaving them with no merchant account or processing capabilities.

A good merchant service provider will offer you the merchant services such as an online virtual terminal, fraud scrubbing, multi-currency processing, direct bank MID (merchant identification), third party aggregator, twenty four hour real-time reporting and the ability to accept all major credit cards that include Visa, Master Card, American Express, Discover, Switch, Solo and JCB. These services are all done in-house by your merchant service provider and offer you and your customers a safe processing environment. Not all merchant service providers can offer these services and handle your high volume business, so research is important.

Many businesses need high volume merchant accounts to keep up with consumer trends and grow their businesses. Your choice to work with a merchant service provider that specializes in high volume and high risk is well in the mainstream of card service and online check processing today. By working with an experienced and reputable merchant service provider, you can ensure the security and vitality your business for years to come.

About the Author: Jennifer Loganathan is the President and CEO of Stradafee Limited. Stradafee is an electronic payments company as well as an eCommerce and High Risk merchant account provider. Merchant accounts make it possible for businesses to use credit card merchant account processing. For more information on credit card processing visit www.stradafee.com.