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ACH Payments: What Are They?
What Are Their Advantages?

by Mike Selner

An ACH payment is a digital transfer of funds made between banks (or other financial institutions) using what is called the Automated Clearing House network.

Businesses use ACH payments for a variety of different purposes, including direct deposit of paychecks to employees and benefits payments. For business-to-business transfers, ACH payments are the standard, with the share of B2B transactions using the ACH network increasing every year.

Consumers also use the ACH network a lot, most commonly to make payments to businesses or other organizations that they owe money to. For example, your rent/mortgage, loan, car, and utility payments are all likely completed through the ACH network.

ACH payments are highly appreciated by both businesses and consumers for the level of cost-effectiveness, accuracy, and convenience that they offer.

  • Cost-effectiveness and accuracy

    ACH payments allow businesses to avoid the processing fees associated with paper checks, credit cards, and debit cards. Furthermore, with the ACH network, the chances of human error and data loss are drastically reduced, which saves you a lot of time and money (to the tune of $3.3 million dollars per breach, according to an IBM report).
  • Convenience

    As mentioned before, with ACH payments, there is no need to deal with paper checks. The same goes for any related physical materials. When you have ACH payments set up, you don’t have to go to the bank to deposit any physical documents or records, saving you time and costs. Transfers through the ACH network are processed quickly and easily. Businesses can set up recurring transfers to automate payments to employees and other organizations, while consumers can set up automatically recurring payments so that they don’t have to remember every time, and don’t miss a beat!

However, the most important benefit that ACH payments offer is security against fraud. Given that it eliminates the transfer of physical materials between several entities, it already reduces the risk of fraud by default. By implementing an ACH fraud prevention system, the risk of any wrongdoing occurring is reduced tremendously.

Whether you are a business or a consumer, there are plenty of options available to you that can make your ACH transactions even more secure than they already are. Some examples of things you can do to prevent ACH fraud include:

  • Creating an authorized user list to limit transaction authorization to specific parties only
  • Using one-time authorization measures to make a unique payment
  • Implementing a fraud filter or freeze condition that allows you to catch, manually review, and prevent potential unauthorized withdrawals before they happen

ACH transfers, meaning payments processed through the Automated Clearing House network, have become the standard for all types of payments (B2B, B2C, C2B). The share of purchases processed through the ACH grows significantly every year, and for good reason. ACH payments offer a level of convenience, cost-effectiveness, accuracy, and security that can’t be replicated with traditional payments using physical documents and records.