Unlocking the Hidden Potential of ACH Payments for Your Merchant Clients

We understand that the goal of every reseller is to find the best payment solutions for their merchants. To do right by them, support them and bring them competitively priced options that set up their business for success. It’s this challenging landscape that drives them to look to your support.

Should they accept checks? What about credit cards? Credit card fees are pricey, what other options do they have? Enter automated clearing house, aka ACH payments processing. A fast, secure transaction process that can streamline your merchants’ business, save them money while earning your more residuals.

Why ACH Payments?

Transactions using the ACH network allow electronic funds transfers between bank accounts, without requiring credit or debit cards. Transactions are not routed through a credit card network to a card issuer for authorization, but instead, payments are processed through bank-to-bank transfers.

Originally, the payment process took days using the ACH networks. Not anymore. Same-day transfers are now widely used, in addition to 24 or 48 hour regular processing times. For resellers, ACH transactions represent a secure payment method that offers merchants a service that costs less and is more efficient.

Growing Demand for ACH Payments

The ACH network handled 8.2 billion payments in the first quarter of 2024. This increase was fueled by a 47% increase in Same Day ACH, which had a total value of $719 billion, a 27.2% increase from 2023. A further breakdown found that:

• Business to Business (B2B) payments increased 10.8%
• Consumer Internet-Initiated debits increased 7.4%
• The total transactions for the first quarter were valued at $20.7 trillion.

Industries Moving to ACH

Manufacturing has witnessed an increase in B2B payments as the industry establishes a more resilient and efficient supply chain. ACH payments allow suppliers to receive payments faster and avoid added fees for wire transfers or check cashing resulting in a more efficient supply chain.

Merchants supplying goods or services to large institutions such as hospitals or education campuses often wait weeks for payment due to paper-based processes. Government agencies also  have lengthy wait times for payments to/from other agencies, taxpayers and businesses. With ACH, payments can be processed within a day, instead of waiting 30 days.

ACH payments can also replace slow traditional check-writing or costly wire-transfer payment methods. ACH batch processing capabilities also reduce the time organizations spend preparing other payment methods. ACH transactions also free up your merchants from time-consuming wire transfer paperwork and approvals – as it gets done once upfront.

Adding to Merchant Benefits

Including ACH payment processing in your toolkit offers merchants a lower-cost alternative to credit cards, a secure payment system and a simplified process for transaction processing,

Cost Savings

ACH payments cost less to process. For example, the 2022 AFP Payments Cost Benchmarking Survey found that companies spent, on average, $2.00 to $4.00 to issue a paper check. That did not include any check-cashing fees a financial institution may charge. According to the same survey, 84% said lower costs were a primary reason for moving to electronic payments.

Similarly, Credit card interchange fees are between 1% and 3% of the transaction amount. That doesn’t include service charges or transaction fees. As those percentages add up, so do the costs for merchants – which eats into your profitability as a reseller.

The AFP survey calculated the median cost of an ACH payment to be between $0.26 and $0.50 USD as a flat rate. Fees may vary based on transaction volume and processor charges. Whether credit card payments or check writing solutions, ACH payments are a cost-effective alternative for most merchants.

ACH payments can save merchants time and money as they attempt to collect on payment failures or refute a chargeback claim. Subscription-based merchants will find ACH processing especially helpful when initiating recurring payments. Consumers often forget to update their credit or debit card information, leading to expired cards and failed payments. Bank accounts however, don’t expire and rarely change.

Improved Security

They may not be making headlines, but cybercriminals still commit crimes. Payment fraud is just one of many methods bad actors use. What happens to a merchant’s bottom line when a fraudster walks out with thousands of dollars of merchandise only to have a chargeback arrive days later?

ACH payments fall under the Electronic Funds Transfer Act, making them subject to the legal protections authorized by the federal government. ACH transactions are encrypted from end-to-end while in transit through the network, making it more difficult for hackers to steal financial information.

Convenience

ACH payments are convenient for merchants and their customers. With online bill pay, consumers can set up recurring payments for utilities, mortgages, rent, tuition or other things they purchase regularly. With this set up, they don’t have to worry about making a payment on time and incurring a late fee.

This process is perfect for landlords looking for on-time rental payments or insurance companies with a monthly payment plan. ACH payments also reduce the time and money spent trying to collect on past-due accounts.

Improving Customer Satisfaction

Adding ACH processing to an resellers’’ list of payment methods to offer can address multiple merchant challenges.

Simplify Payment Processing

By using an ACH processor that offers eCheck capabilities, resellers can help their merchants eliminate checks. There’s no rushing to the bank to deposit checks or feeling the stress of a bounced or bad check. ACH processing can reduce the number of credit card transactions, and the costly fees associated with them. With a simplified process, cash flow can improve.

Lower Costs

Price is always a factor in customer satisfaction, especially in industries with tight profit margins. In B2B markets, a per-transaction fee based on transaction amount can hurt even a solid bottom line and wire transfers are expensive for both the payer and the payee.

Resellers offering ACH payments can help merchants maximize revenue by eliminating high transaction fees, lowering labor costs and getting access to their funds faster.

Improved Cash Flow

Cash flow can be a major concern for businesses, leading them to stress if a substantial invoice is not paid on time. To manage finance more effectively, they often look for discounts on early or prompt payment. Without a strong cash flow, organizations struggle to meet their obligations. There is where it’s important for resellers to have all the resources to help their clients improve operations.

By offering ACH payments, resellers can simplify processes that remove resources from customer-facing tasks. They can expedite payments and minimize payment failures, and can reduce the financial stress of high transaction fees and poor cash flow.

About Us

VCI is a leading ACH payments processor that offers resellers the benefits of ACH payments for their merchants, and for their own portfolio. If you want to grow your bottom line, and make your merchants stickier contact us.