ACH (Automated Clearing House) is a nationwide computer-based network that electronically processes financial transactions between institutions such as banks that participate in it. Businesses and individuals that use ACH can use it to pay their employees, make payments to vendors, pay insurance premiums and mortgage loans, and engage in all sorts of other transactions.
ACH payments are effective substitutes for paper checks, but they are much more convenient for a merchant to use.
As opposed to paper checks, with ACH a merchant no longer needs to deal with trips to the bank or with paper invoices, checks and records. The funds are transferred electronically. The merchant’s customers will also find ACH payments more convenient because they no longer need to carry their checkbooks around or send checks in the mail.
For a merchant, the use of ACH payments reduces the number of staff needed for processing and handling and frees those employees to focus on more important work. The company gains human resources and avoids added costs by redirecting its work force to grow the company and develop new services.
A merchant can also offer convenience to its customers from the use of ACH. An ACH payment normally will settle in the same day that the transaction is made. Customers will want the convenience of knowing with certainty when the payment is made. Offering ACH payments can boost customer loyalty and increase customer retention.
In addition, ACH payments can be an excellent way for customers to make recurring payments, such as auto loan or mortgage payments. This provides them with the convenience of not having to write checks each month and not having to be concerned about whether their checks arrived on time.