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Key Differences Between ACH And Credit Card Processing

Key Differences Between ACH And Credit Card ProcessingYour company needs all of the possible tools out there in order to truly succeed, but it can be difficult to really know just what it is that you need at any given time. When it comes to the different options for accepting payments from your clients or customers, that's even truer. Here at National Processing, we know that the process of selecting a credit card processing company is one that you'll take seriously, and we want you to fully understand everything about it.

For accepting credit cards and credit transactions, one of the biggest areas of confusion is certainly that of figuring out the differences between credit card processing and ACH. Here's a quick breakdown of the two so you'll know which is the best call for your situation.

The biggest difference lies in where the money actually comes from. ACH payment, or Automated Clearing House, is essentially a bank transfer process. It moves funds from one bank account into another, and is usually what occurs when a customer pays with a check that is approved electronically or when a direct debit payment is made. Credit card processing, on the other hand, is slightly different and focuses more on removing funds from a credit provider's account and placing them into the merchant account while then noting that the purchaser owes the credit provider the funds. Most in the industry agree that while ACH comes with slightly more risks – notably the fact that some purchases may be rejected by a bank due to inadequate funds or other similar issues – it's often more cost-effective thanks to the fact that it has lower processing costs. In other words, you'll pay a slightly lower fee but will have a bit more risk than you would with standard credit card processing. The biggest difference between the two is that with credit card purchases, the merchant will essentially lock in the funds that they're owed. With ACH, there's less of a guarantee but somewhat higher rates. The one that is best for you really depends on just what you need from a processing provider, and it's important to spend a few minutes reviewing the basics and the fine print you're provided with before you agree to anything. In both instances you'll be able to begin accepting some form of online or in-store credit/debit card purchases. The key is understanding just what your rates will be and how customers can make purchases. Aside from that, the differences slight.

Posted in ACH Processing, credit card processing on Mar 18, 2014