Home Did you know ? ACH in the Payment API – An Overview

ACH in the Payment API – An Overview

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With the advent of new technologies, we have experienced various new payment options in the market. We, as an e-commerce payment service provider, strive to offer as many payment options to merchants as possible. Therefore, these merchants are able to offer options such as card, wallet, alternatives and bank transfers, to their consumers.

The Automated Clearing House (ACH) has long been used for bill payments in the United States. Our comprehensive Payment Platform allows businesses to utilize this popular payment type, and enables them to process ACH Payments via API for both one-time and recurring payments.

What Exactly is ACH?

ACH is an electronic payment delivery service, and an alternative to credit card payments for U.S. based businesses (Ideally in a B2B setting). This payment method is sometimes defined as electronic check processing, e-Check or ECP. Although it has become one of the popular methods of bill payments, it is difficult using for online shopping, because of the lack of guaranteed funds. Now, the consumers prefer this option while making an online payment for purchasing something.

Transferring money via an ACH payment method involves withdrawal of the amount from the consumer’s account,  and the deposit of the funds into the merchant’s bank account via the ACH network. So, it is much like direct deposit, which works by pushing money between accounts to make a payment. ACH can also be compared to the direct payment method through which the employers make a direct transfer of wages to the bank accounts of their employees.

If you accept the ACH payment, you will be able to gain access to the bank accounts of your customers, by getting the details like account number and routing number. It will allow you to pull the due amount from their accounts in future.

A Comparison between ACH, Debit Cards and Checks

Debit Cards vs. ACH:

As a merchant, you can pull funds directly from customer’s bank accounts by using debit cards. The primary difference between a debit card and ACH is that debit card users  get the same level of fraud protection as credit card users. So, in B2B transactions, where a level of trust has already been established between the two parties, these features are not essential.

Checks vs. ACH:

This method of transferring funds involves paper checks, and it cannot be handled digitally. Therefore, it may involve a probability of human error or delay of transfer caused by mail processing. In addition, as it takes some weeks for a check bounce, check payments are less dependable.

Why Your Business NEEDS ACH

  1. As ACH transactions pull the money directly from the bank account, there is no chance of exceeding the credit card limit of the shoppers. And in cases where businesses buy high-ticket items, ACH eliminates any doubt about the ability of the shoppers to pay.
  2. ACH is an effective payment tool, which has been preferred by the merchants as well as customers because of its convenience of use. As the entire procedure is automated, it is easy to use for both the businesses and buyers.
  3. ACH is less expensive than credit card transactions, as the banks charge a fee for credit cards. Although the ACH transaction processing has  a small processing too, it is considerably less than that of credit cards.

The Procedure ACH Works with

ACH is quite different from credit cards from a processing standpoint. Whether the payment is done by a Payment API or hosted checkout page, it works by following the under-stated procedures:

  1. A request to start the buying process is made by the shopper.
  2. A payment request is sent by Payment Provider to the bank.
  3. The bank verifies the identity and account information of the customer.
  4. A ‘lock’ on the particular amount is set by the bank, for the merchant.
  5. Payment Provider gets an approval notification from the bank.
  6. The Bank eradicates the amount from the account of the shopper, pays for the fees of the transaction and transfers the remaining amount to the account of the merchant.


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