For decades, processing paper checks was the standard for most banks. However, as technology progressed most banks moved away from paper checks and instead began using electronic funds transfer systems to clear debit and credit transactions in a more efficient and timely manner. One of the most secure and reliable electronic systems that has been available for credit card processing has been the ACH, which stands for Automated Clearing House. A very popular choice with merchant accounts, ACH has come to be relied on by more and more financial institutions over the past several years, and has proven to be a solid way for businesses to greatly reduce the number of bad checks they would otherwise receive.
When a business uses ACH in a transaction, it begins with a person, employer, retailer or utility company receiving authorization to issue a transaction to a receiver’s account. Once this is done, a bank or other financial institution acts on behalf of a store or other originator and enters the transaction into the ACH network. The data from the transaction is then sent to an ACH operator, which is almost always the Federal Reserve. Upon receiving the data, it is then sent on to the appropriate receiving institution, which is the originators’ bank. Upon receipt, the bank either pays the transaction or sends it back due to insufficient funds.
For those businesses that want to establish merchant accounts, taking some time to research various ACH vendors is crucial to getting the best deal. Since some vendors offer more services than others, it can be to the business owner’s advantage to shop around and compare many different vendors. Some offer more equipment than others, while some will offer 24/7 live customer service assistance or better maintenance agreements in the event of equipment malfunction. Whatever the case, comparing and contrasting the different vendor options is a smart decision to make.
While using ACH in a transaction is becoming more and more routine for businesses, it has still proven to be a process that must be carefully evaluated to make sure it makes the task of accepting payments easier for merchants. While being a very cost-efficient method of accepting and clearing payments, merchants should remember to shop around for the ACH vendor that offers just what they need. In doing so, they will guarantee an easier experience not just for themselves, but also their customers.