ACH Credit

 

An ACH credit is a type of electronic payment. It uses a computer network called the Automated Clearing House to “push” money from the sender directly into the recipient’s bank account. It’s most commonly used for direct deposit paychecks, online tax refunds, or peer-to-peer payments.

 ACH payments allow banks (or payment service providers) to transfer money from one account to another, without using checks, credit cards, or cash. This makes them extremely useful for repeat transactions, like payroll or recurring monthly payments.

 ACH Credit Vs ACH Debit:

ACH payments come in two flavors; credit or debit. The difference between the two lies in who initiates the transaction, and whether they’re “pushing” or “pulling” the money in your account.

·   An ACH credit is initiated by the sender, and “pushes” money into the receiving account. An example of an ACH credit is a direct deposit paycheck.

• An ACH debit is initiated by the recipient, and “pulls” the money from the sending account. An example of an ACH debit is an auto-pay bill or a monthly subscription.

Keep in mind that not all online bill pay or subscriptions are handled via the ACH network. They may also use credit card, debit card, or wire transfer. Why does that matter? ACH payments are generally safer, cheaper, and more easily reversible.

If the transaction asks for your bank account or checking information, instead of your credit or debit card, it’s probably using the ACH network.

 

 

ACH credits safe:

It may seem unusual when a business asks for your banking details, but ACH payments are actually one of the safest forms of online payment. In fact, the Federal Reserve found that ACH credits have the lowest rate of fraud by value. That means it’s even safer than entering your credit card information.

Of course, you should always use caution when entering your personal information online. Stick to trusted websites that use up-to-date methods of security.

As a business owner, be sure to choose a payment processor that provides secure payment entry and keeps your customers’ data encrypted.

 

ACH credits cost:

There’s typically no cost to receive an ACH credit, but there may be fees involved if you’re the one sending it. The cost of sending an ACH credit depends on the payment processor your business uses. These costs may include:

·   A flat fee per transaction. These often run between $0.20 - $1.50.

·   A percentage of the transaction. Typically 0.5 - 1.5%.

·   A combination of the above.

 

ACH credits take to process:

If you’re on the receiving end of an ACH credit, it’s probably already in your bank account by the time you heard about it.

If you’re the one initiating an ACH credit, most experts recommend to budget for 3-5 business days for a standard ACH transaction. ACH rules require credits to be processed within 1-2 business days, but that depends on when the request was received. It also doesn’t include weekends or holidays.

Some ACH credits may be eligible for same-day or next-day processing, so you should ask your payment provider about those services.

 

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