ACH payment processing, initiated in the early 1970s, is electronic processing through the Automated Clearing House network between personal accounts , business accounts, financial organizations and government departments. This huge network, serving about 115 million people, 3.5 million companies, 20,000 institutions, is a national grid for electronic fund transfers between various bank accounts of both credit and debit financial transactions. ACH transactions are commonly referred to as “direct deposit.”

The transfers, done in electronic batches for credit and debit transactions between various financial institutions, is governed by a non-profit association called NACHA, or National Automated Clearing House Association. NACHA establishes the best business practices and the basic rules for the network. It has been responsible for unprecedented growth in the payment processing industry, and today credit and debit transactions through the ACH network has become a widely accepted way of doing business in the United States. In fact, it is considered the most efficient and cost effective way for electronic fund transfers in North America.

The way the ACH processing payment processing system is fairly simple. The ACH network and the Federal Reserve act as a central clearing system for credit and debit transfers between financial institutions. Thus, it acts as a medium for checking, saving, and loan fund transfers, among other financial transactions.

It makes financial transactions cheaper and faster because of the absence of time and cost in processing paper documents like checks, envelopes, stamps, dollar bills, and ledgers. A person can authorize their bank account to pay recurring bills like mortgage, rent, utility, memberships, and insurance premiums. The account holder does not have to take time to write checks and lick stamps, the post office does not have to deliver it, and the bill collector does not have to have a processing clerk to receive it. Instead, a few routine electronic blips completes the whole transaction in seconds using computer technology. Similarly, a consumer can just as easily receive a paycheck through ACH direct deposit and does not have to stand in a bank line during a lunch break to deposit it.

The ACH network makes cash management almost effortless. It saves money and it improves business work flow. A lot more business gets handled in less time, and it gets handled more efficiently.

ACH payment processing centers accept and process many forms of direct deposits, from payroll to social security and tax refunds. They also allow consumers to make payments directly from their bank accounts for mortgages, utilities and credit cards. Businesses may make payments to other businesses. E-Commerce transactions can be completed, and electronic checks processed. The ACH processing network consists of more than 20,000 financial institutions that serve over three million business and 115 million consumers. Funds are processed in batches, following the rules and regulations set up by the NACHA, its governing body. There are several incentives for merchants to use ACH processing.

The most important reason that merchants use ACH payment processing is the substantial reduction in banking fees. When checks are electronically processed, the amount is verified before transfer is attempted. If there are insufficient funds, the transfer will not occur and there will be no fees on a returned check. Transactions can often be completely processed in 24 to 48 hours. This is several days faster than waiting for checks sent via the Postal Service. When payments and transfers take place electronically, they are processed first. This means faster settlement and funding. If there are insufficient funds, electronic payments are paid as they become available.

When paid on a first come first served basis, the merchant gets paid faster as paper checks are put at the end of the line. With ACH payment processing, much of the process is automated.  For merchants, the ability to scan a check or swipe a card through an electronic reader means fewer errors. If invoices and payments can be accepted electronically, there are none of the expenses associated with mailing a printed statement. From stamps and envelopes to the personnel required to prepare them, man-hours are significantly reduced. Customers like to have the flexibility of several payment options.

When doing business with ACH payment processing, customers have the convenience of setting up automatic payments, so that less time is spent paying the same bills each month.  Payment plans can be set up to assist the customer in fulfilling their financial obligations to the merchant.  The faster and easier payments are, the more likely the customer will be to shop with that merchant again. Reporting and standardized downloads makes it easy for merchants to track settlements and insufficient funds. For more information contact National Processing, Better Business Bureau accredited and experienced in handling all of your processing needs.

ACH payment processing is the updated method for accepting checks remotely.  ACH stands for the Automatic Clearing House.  This is where the funds are routed to for authorization before making their way to your business bank account.  Before this clearing facility was put into place, making remote check payments was nearly impossible.  Not only that, but accepting checks in general took much longer to process.  More and more companies are now making this payment option available to small and large business owners alike.

With ACH payment processing, there are many time saving benefits to be aware of.  One of which is the amount of time between receiving the check information and having the funds available to your account.  You no longer have to physically bring the checks to the bank or wait for them to arrive in the mail.  Instead, once receiving the customer’s account information, it is electronically sent out for authorization.  This also ends up cutting down on fees for processing the checks.  Because it is more cost-efficient than paper checks, this payment method is becoming counted on by more businesses every year.

Another way that ACH payment processing can save you time and money is by setting up automatic, recurring payments. Whether for monthly membership fees, product sent out on a regular basis, or a bill that varies every month, like a utility bill, payments can be setup to be withdrawn automatically.  There is no longer a need to track invoices in order to see who needs to be billed as you are no longer involved in this process.  The automatic payment system will take care of that for you!  Without the need for creating, sending, and tracking invoices you are now able to focus on expanding your business in other ways and will not be bogged down by all the tedious work.

The direct payment that ACH payment processing allows ensures that you will get your money faster.  Also, clearing accounts electronically helps avoid receiving checks with insufficient funds.  Bad checks result in excess fees and an increased amount of time for receiving payment.  All of this complicates bookkeeping and wastes time by needing to track down customers and wait for new checks to arrive.  Another way your business is streamlined is through the ability to setup automatic payments.  Not only is time saved on billing, but late payments are kept to a minimum.  Expediting the payment process from beginning to end results in significant savings for your company.