Why ACH Website Payments Make Sense

Some merchants may consider adding ACH website payments at some point in time to their existing mix of payment rails that they currently use for accepting payments. Here are a few reasons for consideration on why that might be a good idea.

Credit Card Decline Ratesdeclined credit cards

It’s very common for a merchant to have credit card decline rates that are 10% or greater. This is especially true if the merchant has subscription based products or services with recurring payments where decline rates routinely exceed 15%. The amount of labor involved in tracking down new card data from declines is extremely burdensome to operational staff and results in significant revenue loss.

On the flip-side, ACH decline rates are more typically in the sub-2% range. That’s a huge factor in comparison to card decline rates. Why is this? To begin with, banking checking and savings accounts don’t expire. They are also far less likely to be compromised vai point of sale data theft there’s never a worry about a having a bank account reissued for EMV protection.

Reduced Processing Costs

A merchant accepting payments via credit card transaction will pay significantly more than a same-type merchant who utilizes the ACH payment rail, either in conjunction with card payments, or completely in lieu of cards. Merchants accepting payments via a website are paying MOTO rates, typically in the 2.7% range or higher. The same merchant who converts customers over to paying via ACH pays 30 cents or less per transaction (assuming a flat rate ACH model). That’s a huge difference is processing costs.

ACH as an Additional Rail for a Backup Method

Some merchants, especially those who have customers of a subscription nature, can take advantage of obtaining more that one payment rail’s transaction data. In other words, one rail could be set as the customer’s default payment method and the additional one as a backup should a given transaction fail. This would be particularly helpful when it comes to credit card decline rates. Assuming the API integration method supports both credit card and ACH transactions, a failed card transaction could be then originated as an ACH transaction, greatly reducing time spent on manual labor involved with obtaining new card data.

ACH Risk Mitigation

Merchants can take advantage of technologies that allow them to ascertain whether an account is in good standing and has funds available. Further, it is now possible to match a name to an account, greatly reducing fraudulent bank account data.

Let us know your ACH website payments requirements and we’ll do our best to steer you in the right direction.


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>.