The costs of ACH seems to be one of the biggest factors that stand out to most companies. ACH processing is lower and is saves merchants more money versus credit card processing. The reason being is that it’s based on security and risk management.
With credit card transactions, there are certain financial assurances that the credit card companies provide. They offer a safety net when processing financial transactions.
Credit card companies are accountable for the complete process of the transaction. Once the process is completed, merchants or recipients are guaranteed the funds.
With ACH, the costs are lower because the protection and immediacy is not available with this type of transaction. Instead, these ACH companies use a system called “batch processing”. Batch processing is simply not being processed in real time, but stored until the end of the day, then processed with others all at once. ACH transactions are also direct. The funds for the transaction taken directly from the account of the party involved and sent to the merchant/recipient. This is similar to a cash transaction. The funds must be present to use this service.
The costs are simply based on speed. If you want a faster method, credit card payment would be the solution, but more expensive. Those who don’t require immediate funds and deposits, and lower costs, ACH would be a good choice.