Learn How Using an ACH Payment Processor Reduces Risk Around Credit Products

The experience of moving money matters

Amanda Kilmer
Date Published
august 14, 2022
Read Time

The ACH experience

Moving money shouldn’t break the bank — literally.

We rely on each transaction performing smoothly and accurately while also expecting predictability, especially on the financial platforms we use daily. These platforms provide more control with ACH transactions while making experiences smoother and more straightforward. As more people take more ownership of their finances, this control increases flexibility in product offerings companies provide for their customer base like credit building opportunities.

Speed also plays an important role in easy money movement, too. Through products like CashApp or Venmo, instant money movement fits into the mentality of immediate. Where there is speed and accuracy, there is also customer loyalty; with flexibility and precision of each transaction, customers increase their dependability on your platform.

Basics of an ACH payment processor

No checks, no cash, no card? No problem! You just need an ACH (Automated Clearing House) payment processor that makes electronic payments an instant alternative solution.

But what is a ACH payment? An ACH payment, also known as a direct payment, allows you to transfer funds between two different bank accounts without using payment methods such as paper checks, cash, wire transfers, credit or debit cards and is facilitated by the use of an ACH payment processor.

What is ACH payment processing? ACH networks are common and we use them without a second thought from paying bills to getting paid by our employers via direct ACH deposit. Many businesses choose to use ACH payment processing as a faster alternative to payment methods like paper checks and have adopted ACH payments as one of their primary methods of transferring money. ACH payments are more reliable than most other methods of payment while costing less to complete than wire transfers or payments made over a credit card network.

Why does ACH take so long? Businesses are ensuring the amount of money moving from point A to point B is correct and the account information is accurate. ACH payment processing time can take a few business days to completely go through; if you’re looking for direct payment or direct deposits options, ACH payments are the easiest and most secure to set up.

ACH payments are deposits carried out by the bank via The Federal Reserve or the National Automated Clearing House Association (NACHA) and facilitating the transfer of funds from an account at Bank A to an account at Bank B.

ACH transfers

An ACH transfer is a direct money transfer processed under the jurisdiction of the Automated Clearing House Network. Businesses accepting ACH payments online take advantage of several benefits such as lower costs, better security, and greater reliability.

One way ACH payments are completed is by using an ACH transfer app that sends and accepts ACH payments online. If you do make an ACH transfer, the ACH transfer time can be processed the same day and funds will be available the next business day. There are also instant transfers by using tools like Venmo, Zelle, or Square.

There can also be an ACH transfer limit that prevents you from processing ACH payments over a certain amount within a given timeframe. The limits could be configured by your BaaS partner, by the brand itself, or what is allowed by the bank and the Clearing House so you’ll want to check to ensure that your payments will be transferred without any issues.

ACH and Credit

ACH payment processors also pair well with credit building capabilities. Rather than setting up an ACH transfer into a traditional deposit account like a checking account, you can transfer funds into a secure deposit account linked to a secured credit card. This creates a credit limit that is controlled by the card owner and is consistently reporting to all three credit bureaus — responsibly building credit scores in the process.

When you have a credit card balance, you need to pay before the due date or there’s the possibility to incur late fees. Setting up an ACH deposit that repays the balance at either the due date or mid-cycle (making two payments) helps stay on top of that bill — and helps stay on top of your credit.

ACH check processing

ACH check processing is an efficient and simple way to make important payments inexpensively. Once you know how to make an ACH payment and who accepts ACH payments online, it’s a neat tool that makes your payments a breeze. An ACH transfer is widely accepted and setup is as simple as attaching your bank account to a payment schedule with, for example, a utility company to pay your monthly bill.

Many types of businesses accept ACH payments online. For instance, utility companies that collect recurring payments from a large number of customers use ACH payments — partly because ACH payments are more cost-effective for companies that need to process large quantities of automated payments frequently and ACH payments are a reliable way to collect recurring payments. ACH payments are also more secure than paper checks as they usually have a lower risk of fraud.

An additional scenario: An employer uses ACH payments to pay employees via direct deposit. The employee would first sign up for direct deposit and provide the employer with their bank account information. When a paycheck is due, the employer’s bank would send out a request to the employee’s bank account and coordinate the transfer from the employer's bank account to the employee’s bank account. The whole transaction is regulated by the National Automated Clearing House Association.

Accept ACH payments instantly

Some payment tools make it possible to accept ACH payments instantly. You may be able to find an instant ACH transfer app that can facilitate instant ACH transfer online. Companies, like Bond, are able to facilitate same-day ACH transfers to external accounts.

Companies that are able to accept ACH payments online are also able to take advantage of the fact that ACH payments are cheaper to process. If you’re looking to accept ACH payments, Square is a company that might come to mind. ACH payments are a common money transfer method among businesses that accept echeck payments and may be able to reduce payment processing expenses by using ACH payments instead. Some banks also allow instant ACH transfer with no verification.

Send ACH payment online

While sending ACH payments online, you’re experiencing the benefits of ACH in real time like lower costs and secure processing. One of the biggest comparisons to ACH is the ACH vs wire transfer conversation. A wire transfer generally moves money from one bank to another nearly instantly, whereas an ACH transfer can take a few days. On the other hand, wire transfers are typically more expensive than ACH transfers so a business is able to save money by opting for the ACH method instead.

Benefits of ACH processing

Some of the best ACH processing companies provide convenient and direct money transfers by embedding an ACH processing app from an existing ACH processing company into their tech stack. Now, ACH is as accessible as pushing a few buttons; by having the ability to utilize ACH transfers at our fingertips, companies have made money movement seamless, easy, and efficient. In 2018, for the first time, ACH debit transfers outnumbered the amount of check payments, according to The Federal Reserve.

ACH also presents a more cost-effective way of making recurring payments for businesses. When they process large numbers of payments on a regular basis, the cost starts to add up; using ACH payments reduces these expenses.

Companies, additionally, have come to rely on ACH payments. When they have important payments to process, they choose to make the transfer via ACH to ensure the payment goes through securely. Not only is that the option companies choose, but ACH is also the preferred method of payment from their customers so they are guaranteed to receive payment for their services. According to PYMNTS, 78% of organizations use ACH for both credit and debit transactions.

Meet Bond’s ACH process enhancements

Bond has taken our existing ACH process and improved the alerting and monitoring around ACH returns and rejects, ACH duplicates, and ACH receiving transactions, which then ensures maximum precision with each transaction. This was a great way to increase trust on our platform as Bond is able to control the entire stack all the way to the bank.

Being partnered with multiple banks — most recently Evolve – and directly integrated into their ACH origination process, Bond manages the entire non-bank side of the integration by minimizing per-ACH costs and eliminating all middlemen between the bank and Bond.

Boosted by Bond

Unlike other platforms, Bond doesn't use intermediaries or send you to third-parties to start your integration. Our streamlined ACH integration and thorough controls has allowed us to achieve, on average, ACH return rates as low as 1% since January 2022 — all amidst a 16% increase in overall transaction volume.

Being directly connected to the bank improves Bond’s transaction-level reconciliation and also between Bond and the client. This gives Bond’s transaction reconciliation engine both the widest viewpoint and the most data points to examine and ensure that each transaction is correct on all levels. All ACH transactions are processed by our bank partners in a timely manner to ensure an expedient series of events.

Bond knows and understands that your money doesn’t grow on trees and you need to move it from point A to point B on time and as efficiently as possible. Have a project in mind that you’d like to flesh out? Contact us!