Best High Risk ACH Processors
High Risk ACH processing occurs when an ACH debit to a consumer or business checking account has a greater likelihood of being disputed by that customer as either “Not Being Authorized” or if not fulfilled to consumer’s satisfaction “Authorization Revoked”.
ACH network rules allow consumers and businesses to dispute debits to their checking account. NACHA the governing body of the ACH network provides consumers and businesses protection again 1-Unauthorized debits and 2-”Failure to deliver” products/services.
Typically a business utilizing ACH Processing must keep these dispute rates below 1%.
There are many legitimate businesses whose customer base is more likely to chargeback or dispute debits. Some common examples would include lending, tech support, travel, dating and credit repair.
Consider a Payday Loan Lender. They lend $500 to Sam Jones and then start collecting payments via ACH to satisfy loan conditions. There may be times where Sam Jones has very little money in his account. The $99 debit from the Payday Loan company was needed to buy groceries.
Sam disputed the debit and even though the Payday company has her written assent to debit [requirement for recurring debits] Sam’s bank upholds the chargeback and the Payday Loan company is out $99. This is an example of “friendly fraud”. The consumer knows very well they owe the money but still initiate and win chargebacks. In contrast to the credit card world the ACH world does not have a mature means of fighting consumer chargebacks.
So the high risk ACH part is due to higher probability of chargebacks. But who has the risk?
Answer: The Third Party ACH Processor
The Best High Risk ACH Processors will offer you a checking account verification solution to significantly reduce returns due to NSF, closed accounts and more. This is important because every return counts toward your 1% threshold.
In addition the best ACH processors will also offer an ACH API that enables real-time return reporting. The faster rejected payments are know about the more options your business has to successfully collect payment.
A chargeback handling interface where you can respond with your documentation supporting the debit is very important as often times chargebacks are manually reported.
Strong communication and a willingness to work with your business on reducing chargebacks is another must have in a high risk ACH processor.