3 ACH Solutions you should be evaluating for your payments
Also known as echecks, ACH payments are digital payments that operate similarly to the paper check process that many payment processors now offer. In fact they came about from the paper check process when banks and check processors realized that the system they built to handle checks could be used even more easily to handle just the underlying banking and account information. Instead of having a paper trail, ACH payments transmit a bank routing number and specific account number through the ACH system electronically. This creates what is essentially a pure electronic transfer while reducing costs for companies that use this payment method, enhancing their customer service and profitability.
ACH payments are commonly used for direct deposits for employees as well as for payments for mortgages, rent, loans and other types of bills. Increasingly, ACH payments are being used for B2B transactions and ecommerce. Typically ACH payments are still not instant – they use the same process as checks where the receiving bank verifies the transaction before releasing the funds and they route through a system that only guarantees three day settlement of funds. However, the NACHA —The Electronic Payments Association, the rule maker for the ACH Network, has been testing same day ACH payments for some time and it is expected that they will roll out widely in 2017. NACHA released Same Day ACH transaction volume data for October 2016 and reported an ever-increasing volume of ACH transactions. There were 3.8 million transactions in October that totaled $4.98 billion and an average transaction amount of $1,303.
This increase illustrates the growing demand for the fastest payment methods possible – and it’s a demand that ACH can fulfill for those seeking this speed. Plus, ACH is known to be one of the lowest cost methods of payment, especially since it also can handle very large transaction amounts as well as bulk transactions in an efficient manner.
NACHA also shared some key data related to the growing use of same-day ACH payments just during October 2016:
- Direct Deposit via ACH transactions, including those for emergency payroll and pension payments, were the largest type of same-day ACH payments. These transactions were 49 percent of the same day ACH volume, with 1.9 million transactions that totaled $1.6 billion.
- Business-to-business payments were 36 percent of the same day ACH volume. There were 1.4 million transactions that totaled $2.8 billion.
- There were 506,000 same-day person-to-person payments and 61,000 consumer bill payments.
With these statistics in mind, it’s important to consider three ACH issues related to the overall payment experience when evaluating ACH for your own site:
- The Merchant Experience: The ACH solution for the merchant has to provide an experience that delivers on their needs. These include the demand for a low-friction sign-up process where there is flexibility and a minimum amount of information that has to be shared upfront to get payment acceptance started. Offering an engaging and efficient onboarding process is an important aspect to evaluate as part of your ACH solution. Others areas include ensuring you have a user-friendly, integrated system to offer with powerful fraud protection features. Lastly, make sure you have responsive support on all levels, including a human connection as well as through other channels like tier 1 and tier 2 as well as any self-service help desk features. Customers feel safer if they can talk to another human and not just a robot.
- The Payer Experience: From the payer’s experience, you also need to evaluate the expectations they have and provide numerous payment options, including bank transfer through ACH and that they can receive alerts and notifications about their payment status. The customer/client also wants to make sure there aren’t fraudulent merchants out there, so they can trust that making these ACH payments will be safe, including the use of such security tools as tokenization and the required PCI compliance. The other aspect you need to check is that you can offer an integrated user experience because this is what improves your conversion rate. It’s also important to determine if you have made the actual checkout experience for ACH as simple to understand and use as possible.
- Your Own Experience: Any ACH solution you use should also provide you and your business with the best experience possible in order to further that return on investment that you are making in offering this payment method. That means any company you work with that provides ACH for you should also deliver comprehensive reports that deliver insights into the costs, performance, and transaction volume. You also need to assess if your ACH provider can offer implementation and Tier 2 support as well as dedicated account managers to ensure you can deliver the best experience for all stakeholders involved.
When assessing the ACH solutions in relation to the merchant, payer, and your own experience, you want to make sure you are doing everything you can to address all needs and create the best user experience possible while also maximizing your own profits with the most efficient and secure ACH process available.