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Informative Articles

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One Solution to Bad Credit - how to beat the Credit Bureaus at their own game.
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ACH or Credit Cards

Most businesses accept credit cards and consider the process fees a cost of doing business. However by implementing an ACH payment system you can realize dramatic savings and increase sales.

ACH refers to the Automated Clearing House and generically means moving money electronically to and from checking and savings accounts. An example would be a check by phone or taking recurring payments directly from a checking account.

The MAJOR difference between ACH and credit card processing is that a credit card transaction "captures" the merchant's funds from the consumer and essentially guarantees payment. An ACH transaction is a request to transfer funds. The transaction may reject for several reasons with the most common being NSF (non sufficient funds) or a closed account. The funds are not guaranteed.

It is the guarantee piece that allows the credit card company to charge a percentage of the transaction to cover the risks involved. Typically a transaction will consist of a discount rate, 2.5% for example and a transaction fee,


typically in the 30 cent range. This means that every $100 processed incurs about $2.85 in merchant fees.

Contrast this with an ACH transaction. Typically there is no discount rate just a .30 (or less) transaction fee. If you process $25,000 per month using ACH processing will save around $7500 per year. Certainly you will have more "failed" sales due to ACH transaction rejects (eg NSF) but your transaction savings will far exceed these losses. In addition you will appeal to a much wider range of consumers. Estimates vary but MANY people do not have credit cards or are at their limit on their cards. So the benefits are two fold-much reduced transaction fees and a new payment vehicle for your customers.

So consider ACH processing for your business. It will save you money and win new customers.

About the author:

Wayne Akey has helped numerous businesses save time and money with ACH processing. Get your free report on how your business can benefit http://www.ach-payments.com/software/secrets.doc or visit http://www.ach-payments.com