With many people starting to use ACH payments, or eChecks, as one of their preferred methods of payment, it might be time for small business owners to look to ACH payments as one potential payment solution for their business.
ACH (Automated Clearing House) payments are without doubt a payment method growing in popularity, with Nacha reporting a 9 percent increase in payments across the ACH network in 2020 compared to 2019. But how can ACH payments help your small business? There are several ways that ACH payment technology can be implemented into a business, big or small, allowing both the customer and business to benefit.
We’ve looked at some of the most common uses for ACH payments in small businesses, showing exactly how they can be the ideal quick and electronic payment method.
How do ACH payments work?
ACH payments are made by directly transferring funds from one bank to another. This means that businesses and customers can send funds for one-off or regular payments through the ACH payment network. This cuts out the use of physical debit and credit cards, as well as paper checks.
ACH payments are processed through the Automatic Clearing House and are often employed by large businesses to pay their employees or for transfers between institutions, but they can also be a useful payment solution for small businesses looking to use a secure and modern alternative to traditional check or card payments.
The ACH Network is an electronic system serving more than 10,000 financial institutions to facilitate financial transactions in the United States. The ACH Network essentially acts delivery mechanism that helps people and organizations move money from one bank account to another. ACH transactions consist of direct deposits and direct payments, including business-to-business (B2B) transactions, government transactions, and consumer transactions.
Four ways ACH payments can help small businesses
The most important consideration for any business is how each payment method can be to their benefit. When it comes to ACH payments, there are numerous ways they can be integrated into processes and become a useful addition to your payment options.
1. Receiving customer payments
To receive ACH payments, your customers must first authorize the transaction to transfer funds from their bank to yours. This is where using Authorize.net’s eChecks.net electronic check solution can make processing ACH echeck payments much quicker and easier, with customers only needing to fill out an eCheck authorization form for acceptance. This provides those customers with a much more secure way of paying via a traditional paper check with all the benefits of the contactless world.
2. Eliminate card brand fees
ACH payments from your customers can actually be more cost effective than card payments. Card brands charge fees for processing payments using their card network. By allowing your customers to pay by using their banking information you avoid incurring those card-based fees. This may seem insignificant per transaction, but when a significant volume of payments are made this way, the savings can be substantial.
3. Paying suppliers
If your small business needs to regularly pay suppliers who only accept electronic payment, ACH payments can be an ideal way to do this. The safe and convenient manner of sending ACH payments means that it’s preferred by many small businesses. With the threat of fraud drastically diminished, small businesses can pay suppliers without the worry of losing money or the inconvenience of using paper checks.
4. Paying taxes
Paying government taxes to the IRS is made much easier by using ACH payments for withdrawal of funds. Simply withdraw funds using the appropriate corresponding tax forms and tax payments to the government can be made with ease. You can find out more about the process by reading the Direct Pay section of the IRS website.
5. Paying employees
ACH payments are used by many large businesses to pay their employees, and this is something that can also be used by small businesses. For all new employees, your small business will need to set up a payment instruction using the recipient’s bank routing number and account number, along with the necessary authorization from your own bank.
Through Authorize.net, ACH payments are designed to be made simple using our eCheck solution. To find out more about ACH payments or eCheck, sign up online or call 1-888-323-4289.