What Are ACH Payments?

What Are ACH Payments?

Posted by Checkbook on Sep 17, 2020

Trying to make or receive direct payments without the additional fees and obstacles of credit cards or paper checks? ACH payments may be the answer. Automated Clearing House (ACH) payments are electronic payments that pull directly from a checking account.

To make an ACH transaction, the customer must authorize a biller, corporation, or any receiver, to debit directly from the customer’s checking or savings account. This process typically involves the customer providing their bank account and routing number. The biller prepares the ACH transaction for electronic submission from the originating depository financial institution (ODFI) with the account and payment information. The customer-specified payment date is sent along with the submission. The information is sent through the ACH network, which then credits the ODFI and and debits the customer’s bank account (RDFI). The biller and customer should be notified of ACH payments.

In contrast to credit card payments, ACH payments are only conducted on banking days and settled at a specified time each day.


Pitfalls of ACH Payments

Despite the benefits of ACH payments – including reduced costs, increased efficiency, trackability, etc. – customers must give up certain levels of control over their payments. First, ACH payments require customers to provide sensitive bank information. In some cases, customers may be exposed to chances of erroneous draws or overdrafts caused by the biller. In addition to the fact that ACH payments cannot be conducted in real-time, these transactions are also irrevocable and irreversible after settlement. However, you are also protected against ACH errors or fraud with timely reporting.

Related Posts

Why is Checkbook right for you?

The "Last Mile Solution" - No Signup | No Download | Flat Rate | Pay Anyone

Checkbook vs. Dwolla

Checkbook and Dwolla are two companies that aim to develop technology to overcome the hurdles of traditional payment methods. There is, however, are many distinctions between the two.

What Are ACH Payments?

ACH payments can be confusing. You might have heard they can save your business with payment processing fees, but not sure how. We are going to cover what ach payments are, ach payments processing, and if ach payments are safe.

Ready to get started?

Explore Checkbook, or create an account instantly and start sending payments. You can also contact us to design a custom package for your business.

icon
Always know what you pay

Integrated per-transaction pricing with no hidden fees.

icon
Start your integration

Get up and running with Checkbook in as little as 10 minutes.