ACH Processing: Frequently Asked Questions

An Automated Cleaning House (ACH) account allows businesses to accept debit payments in store, over the telephone and online. If your business is considering processing ACH payments, but has questions about what processing them entails, the following answers may help.

How does the ACH payment process work?

ACH processing (a.k.a. electronic check processing) has four steps. (1) The party making a payment (a.k.a. receiver) authorizes the party receiving it (a.k.a. originator) to issue an ACH request to its checking account. (2) The originator submits an ACH request to an Originating Financial Depository Institution (ODFI). (3) The ODFI submits the request to an ACH operator. (4) The operator submits the request to a Receiving Depository Financial Institution (RDFI). (5) The RDFI removes the specified funds from the receiver’s checking account and transfers it to the originator’s account.

What type of authorization is required from a receiver?

The type of authorization required from a receiver depends on the standard entry class (SEC) code of a transaction. Authorization consists of written, verbal, or electronic authorization. Most consumer transactions require electronic authorization, such as when a customer checkmarks a virtual box located in an Internet payment gateway.

What are the benefits of ACH payment for merchants?

Merchants benefit from electronic check processing in several ways. One benefit is faster transfer of funds. Unlike paper check payments, ACH payments transfer in twenty-four hours or less. A second benefit is ACH transactions typically cost less than credit transactions. A third benefit is ACH payments accommodate consumers who pay by debit instead of credit. Yet another benefit is collateral expenses such as postage and collection action can be reduced.

What are the benefits of ACH payments for consumers?

Consumers benefit from electronic check processing in ways similar to merchants. One benefit is funds are withdrawn in a timely fashion, which simplifies financial management. A second benefit is superior security compared to paper check payments. A third benefit is the elimination of postage cost and the need to buy checks. Yet another benefit is the convenience of paying by check online.

What types of account fees are charged for ACH Processing?

The fees charged for electronic check processing are similar to those charged for a credit card merchant account. Basic account fees for electronic check processing are: discount rate, transaction fee, gateway fee, monthly statement fee and monthly minimum fee.

Who establishes the rules and regulations for ACH Processing?

Both NACHA – The Electronic Payment Association and the Federal Reserve establish the rules and regulations of the ACH network. Merchant service providers (MSP) adhere to these rules.

Call AVPS to Open an ACH Account

At AVPS, we offer a variety of merchant accounts that make it easy for merchants to accept payment either in the store or out of the store, over the telephone, through the mail and over the Internet.

If your business needs an electronic check processing account or a different type of merchant account, call us today to learn the best account options for its unique needs. We have over twenty-five years experience in both Small Business Merchant Accounts and servicing merchants.










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