Virtual Terminal for ACH Payment Processing

Using a Virtual Terminal for ACH Processing: Benefits Over Credit Card Processing

ACH Integration

ACH (Automated Clearing House) processing and credit card processing are both essential components in the financial ecosystem, facilitating transactions between businesses, customers, and financial institutions. With advancements in technology, the utilization of virtual terminals has made the management of these transactions smoother, more efficient, and more secure. In particular, an ACH Virtual Terminal presents distinct advantages over traditional credit card processing. Here’s why:

  1. Cost Efficiency:

ACH Processing: Typically, ACH processing fees are lower than credit card fees. Businesses are charged a flat fee per transaction, which means no matter the amount, the cost remains consistent. For larger transactions, this can result in substantial savings.

Credit Card Processing: Credit card processors typically charge a percentage of the transaction amount plus a flat fee. As transaction volumes or ticket sizes increase, so do the fees. Particularly for businesses with significant transaction volumes, this can amount to a hefty sum.

  1. Enhanced Security:

ACH Processing: ACH payments leverage robust verification processes, reducing the risk of fraudulent transactions. With the rise of virtual terminals, tokenization technology is often implemented, ensuring sensitive data is converted into non-decipherable codes, adding an extra layer of security.

Credit Card Processing: While credit card transactions also benefit from stringent security protocols, they are more susceptible to fraud and chargebacks. The prevalence of credit card data theft and associated fraud is considerably higher than ACH fraud.

  1. Direct Bank-to-Bank Transactions:

ACH Processing: ACH transfers occur directly between bank accounts, ensuring funds are transferred securely without intermediaries. This direct process typically results in fewer transaction errors and faster processing times.

Credit Card Processing: Credit card transactions involve multiple intermediaries, including the merchant service provider, card association, issuing bank, and acquiring bank. Each step introduces potential points of failure or delay.

  1. Recurring Payments Simplified:

ACH Recurring Payment Processing: ACH is inherently built for recurring transactions. For businesses that rely on subscriptions or regular payments (like utilities or rental companies), ACH offers a straightforward way to handle recurring debits, ensuring timely and consistent revenue streams.

Credit Card Processing: While credit cards also support recurring payments, issues like card expirations, limits, or reported lost/stolen cards can disrupt the process.

  1. Reduced Chargebacks:


ACH Processing: ACH transactions come with a limited timeframe in which customers can dispute a transaction, reducing the likelihood of chargebacks. Additionally, reasons for ACH chargebacks are fewer compared to credit cards.

Credit Card Processing: The credit card industry is notoriously complex when it comes to chargebacks. Consumers can dispute transactions for a multitude of reasons, and businesses often find themselves on the defensive, proving the legitimacy of a sale.

Virtual Terminals: Enhancing ACH Payment Benefits

The evolution of virtual terminals has further accentuated the benefits of ACH processing. ACH Virtual terminals provide a digital interface for businesses to input and process transactions without the need for a physical card reader. For ACH, this means:

Accessibility: Any device with internet connectivity can turn into a payment gateway.

Flexibility: Process payments anytime, anywhere.

Security: With encrypted data and tokenization, virtual terminals ensure ACH data remains secure.

So, while credit card processing remains indispensable for many businesses, the undeniable benefits of ACH processing, especially when paired with virtual terminals, make it an attractive alternative or complementary option. Businesses can achieve cost savings, enjoy enhanced security, and experience streamlined processes by embracing ACH transactions via virtual terminals.


About Gene

Gene is a 24 year veteran of the electronic payments industry and has consulted with countless companies of all sizes. He has overseen large underwriting portfolios, directed IT staff, and currently serves as the Director of Business Development. Gene has appeared before the U.S. Congress to provide expert opinions regarding developing technology and transaction risks towards solutions for the payroll industry. You can find him on LinkedIn>.