ACH vs. eChecks, What Your Small Business Needs to Know

Are you confused about what ACH and eCheck are? And do they matter to your small business’ daily operations? The terms ACH and eCheck are often used interchangeably, but there are differences between the two.

You already know funds can be transferred directly between bank accounts. Traditionally, these types of transfers (e.g. paychecks and loan payments) are for large sums of money passed between banks and large corporations. They involve preexisting authorizations to transact electronically and the ACH network.

Automated Clearing House (ACH) is an electronic network for financial transactions in the U.S., and processes large volumes of credit and debit transactions in batches and includes credit transfers (direct deposit, payroll and vendor payments). ECheck (electronic check), on the other hand, is a new type of electronic bank debit method. This option allows small businesses – even individuals – to take payments directly from bank accounts.

Why direct bank payments are important for small business owners

For a very long time, credit cards have run the show when it comes to online transactions, especially ecommerce. However, as a business owner, you know that credit card fees add up quickly and considerably chip away at your profits. The advantage of ACH and eCheck is that there is only a small, fixed fee per transaction.

Your business can easily covert paper checks to eChecks right from your office by simply entering in the numbers yourself, or you can transform them into electronic checks via a check reader. Rather than waiting seven to ten days for paper checks to process, electronic checks can be processed in just a few days. Through the help of a good provider, your business can offer these options to your customers alongside credit cards (or exclusively).

Where can you find ACH/eCheck services?

The key is to find a payment processing provider that specializes in working with your business type and industry that also offers ach echeck services. Why? Depending on your business type, traditional providers may be unwilling to work with you; they shy away from businesses they consider “too risky” (e.g. business startups, bad or no credit history, high ticket sales, high chargeback rates, etc.). The provider you choose should understand your business unique needs and situation and provide the very best in merchant services – minus unnecessary costs and fees.

Author Bio: As an account executive, Michael Hollis has funded millions by using alternative funding solutions. His experience and extensive knowledge of the industry has become a true asset for First American Merchant.