Automated Clearing House payments comprise the large electronic network that handles the majority of financial transactions in the United States. The clearing house is responsible for processing a variety of electronic payments including large numbers of debit and credit transactions. These can include direct deposits of payroll checks and vendor payments, consumer payments of bills for insurance premiums and mortgages. It’s also become popular with the Point of Purchase check conversion program that’s used by more and more businesses today. ACH payments are now the preferred method of payment processing for both government and business organizations, preferring customers to use it rather than credit or debit cards. Last year, more than 20 billion transactions were processed, totaling almost $37 billion.
When establishing merchant accounts, businesses gain many advantages by using ACH services. Transactions are processed quicker, allowing a business to reduce its amount of paperwork and processing costs while increasing its cash position. By using merchant accounts, businesses can be assured of having their ACH payments presented to the Federal Reserve’s ACH system in a timely manner. In addition to direct deposit of payroll checks, businesses can also use ACH for their federal and state tax payments, recurring payments of collecting dues or payments.
Businesses using ACH for payment processing can eliminate floating of payments, letting them have more control over their cash flow. The automated system is also advantageous for businesses with multiple locations, such as franchises or branches. By using this system, a business can have better daily control of its cash, letting it have more flexibility with its transactions.
Another advantage of ACH payments is it allows for electronic funding of debit or credit transactions anywhere in the United States, giving greater flexibility to businesses located in both the biggest cities or the most remote locations. Because small businesses represent a vast yet under-developed market of the population, more merchant accounts companies are ready and willing to work with businesses to help them convert to ACH payments on a daily basis, with some envisioning the day when cash will no longer be used for any payments to them. Person to Person payments are also becoming popular with ACH payments, giving financial institutions another option to offer clients.
ACH payments are the wave of the future, and businesses who take advantage of the trend now will be able to maximize the system best to help their daily operations.