It’s no secret that ACH Payments are cheaper to process than credit card transactions. The reason for that can partly be found in the fact that the ACH network is not real-time like the credit card networks, thus don’t have the ability to “reserve” funds for a given transaction. ACH transactions that are originated are subject to NACHA rules which include a time-line for the receiving banks (RDFI) that application’s customers have their bank account with. Returned items can typically filter in anywhere from a day to 4 business days after the transaction was originated. These return notifications can come in one of many forms, i.e., account closed, NSF, etc. That’s not ideal for a website that is shipping a product of any significant value.
On the other hand, businesses with a subscription model (have a recurring payments component) generally have a long standing relationship with their customers and the customers rely on a service or regularly delivered product. Products on a subscription model tend to be something either ancillary to an associated product that keep them functioning or something not of significant value that might cause significant harm to the company’s bottom-line. Services can many times be paused or access can be denied until the customer makes their form of payment “right,” like restricting a subscription service.
It’s these subscription model businesses that can take advantage of ACH Processing and lower their overall processing costs and lead to a healthier bottom-line.
Of course there are other types of organizations that can benefit from ACH Processing. A few examples could include organizational dues, school payments, charitable causes, etc.
If you believe that your organization or business might be right for accepting ACH Payments, contact us and we will walk you through all the options that you might have.