Designing a user-friendly payment processor is one of the best ways to boost sales revenue. A complex payment process can cause customers to abandon their shopping cart or leave a financial services app altogether. This will result in a decreased competitive edge for your company which will directly impact whether or not you're able to secure sales down the line.
Accepting ACH payments is a great way to offer customers faster transactions.
ACH, short for the Automated Clearing House network, is an electronic system that financial institutions use to process electronic payments. When your small business accepts ACH payments, you offer customers an added degree of flexibility: they know precisely when their online payment will show up on the account, and it's quick and easy to use.
Here's a deeper look at ACH payments, how they work, who uses them, and how they can help your business as a convenience for settling your transactions.
The Basics of ACH Payments
ACH is a system used by banks across the country to send money. It's very reliable and has been around for years. One of the main benefits is that it lets you conduct secure and fast transactions without having to pay hidden fees or an extra transaction fee on every purchase.
An ACH transaction consists of a request to debit or credit a certain amount of money from one bank account and transfer it electronically (not by check, wire, or any other physical equivalent) to another receiving depository financial institution, such as a bank or merchant account.
Of course, safety is a concern when accepting ACH payments.
The ACH transfer network is a reliable way of sending fast payments. The automated clearing house is governed by NACHA (National Automated Clearing House Association), an independent organization owned by member institutions (banks, credit unions, and payment processors) and monitored by the Federal Reserve.
The ACH system in the US is the most popular payment method because it's both fast and trusted. It's also easier to use than other methods. And it is no more intrusive than negotiating a check.
ACH payments are suitable for anyone with a business, whether another company or client. ACH payment processing allows for an economical way to process money from customers, where you can stop worrying about checks and closely monitor multiple transactions.
Who Uses ACH Payments?
More and more businesses are now accepting ACH payments. This is because they make it faster, easier, and cheaper to do business with fewer overhead costs. Given the prevalence of ACH payments, it's likely that you may have already made use of them before.
So far, there are many different ways that ACH payments have been used. These include:
- Federal, state, and local tax payments
- Electronic checks
- Direct deposit, such as government benefits, tax refunds, and payroll
- Direct debit, such as utility bills, subscriptions, and insurance premiums
- Recurring payment transactions
- Third-party payment gateway apps such as PayPal, Venmo, and Zelle
Using an ACH payment processor can also enable business-to-business transactions while keeping your accounts payable processes streamlined and a payment option that works for the consumer, such as still accepting any card payment for those who require them.
Is Accepting ACH Payments Expensive?
ACH processing is one of the most economical ways for a customer to make a payment. Besides being less expensive than other electronic payment methods, ACH is often the only type your customer will consider using because of the convenience and safety associated with the transfer system.
A bank or other financial institution often has no charges for most of their ACH direct debits. They may sometimes carry charges for out-of-the-ordinary transactions, such as one-time setup, a processing fee, or service visits. However, the average consumer still prefers ACH payment transfers because they can often complete transactions via mobile or online banking.
For ACH direct deposit or credit, some fees are typically required. However, most large banks offer free external funds transfers, eliminating such costs.
Fintech companies can offer consumers the option to use (cheaper) ACH payments rather than their more expensive counterparts—credit cards.
The ACH charges are usually between 25-75 cents per transaction. This is much cheaper than a credit card payment, which generally charges a percentage of the transaction and a fee. You can use ACH to save money by sending fewer checks, avoiding high-cost cashing fees, and passing these savings on to your customers.
What is an ACH Payment API?
An ACH API is a programming interface used by fintech startups to streamline the process of setting up bank transactions.
The ACH payment API helps you send money via ACH debit and ACH credit from only three separate endpoints. This can significantly reduce integration time for fintech startups. This helps free up time to focus on other aspects of your workflow, like client management, sales, and development.
There's no denying that credit card payments are quick and easy, but the fees can add up to a lot of money. An ACH payment API will allow you to transfer your funds from one place to another at a much lower cost. If you pay for goods or services using a bank account, you can likely implement Sila's ACH payment API to benefit your business greatly.
Integrate ACH into Your Banking Services for Customers
For a long time, the most common payment APIs using the ACH system performed credit card processing, but they have quickly expanded to offer new features and popular integrations. ACH payment APIs are now frequently used in person-to-person transactions and business-to-customer transactions. Companies can use Sila's ACH payment API to allow customers to purchase cryptocurrency and add a layer of risk protection due to the API integration.
Using Sila’s APIs for your financial technology company allows you to focus on what's essential—creativity and innovation.
With the code already implemented, you can spend more time making your products better and more appealing to consumers. Sila's API automatically gives you the functionality you need, ready to go.
Fintech developers were skeptical about making any changes to their API, but now they know they’re necessary if they want the best results. The chances of reaching your goals are much higher if your stakeholders have what they need and if you have great support.
Accept ACH Payments Online with Sila
Accepting online payments is easy with Sila's ACH payment API. Sila reduces the learning curve needed for users to deal with technicalities and complicated payment terminology. Although APIs may seem intimidating to work with, the Sila API is designed to be more accessible than ever before.
Sila makes it easy to understand if you aren't sure what an API does. Sila is what you need when you're looking at your options. It has some key features that set it apart:
- Digital wallet creation
- KYB/KYC checks
- Bank account verification
- Identity verification
- Secure ACH transactions
Sila’s API minimizes slow processing times and high fees by creating a faster and cheaper way to transfer money. The Sila API allows small business owners more access to financial services, which helps them compete more effectively. They will have faster service, and their data will be secure.
Sending and storing money the way you want has just been made easier with our APIs. You can now send, store, and exchange between fiat bank accounts, and digital wallets to make it fast and compliant.
Sila can help you bring your financial app idea to life. Get started today and make it a success. You bring the great idea; Sila brings the platform to release it to the world.
6 Advantages of Using Payment APIs
Adding payment APIs into your business model is easy with Sila. Read on to learn how.
Outsource your US Financial Compliance with Sila
Financial compliance is tedious and costly, and it’s even worse if you fail it. Outsource your US financial compliance with Sila.
Sending ACH Payments with Sila
With secure solutions like Sila, you can move ACH payments and money internationally faster (and more affordably) than ever before.
Understanding Financial Platforms: Dwolla vs Sila
Dwolla is a financial platform entrepreneurs can use for fintech innovation. Here’s the breakdown of Dwolla vs. Sila.
Using an International Money Transfer API
Sila’s innovative international money transfer API can expedite international payments and open up global financial systems.