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Everything You Need To Know About Setting Up & Accepting ACH Payments

ACH payments can be ideal for monthly subscriptions or even installment payment plans. In some cases, they may be appropriate for one-off purchases.

    Chris Motola
  • 21 comments
  • Updated on:
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Chris Motola

Chris Motola

Expert Analyst & Reviewer at Merchant Maverick
An expert in personal and business loans and financial health, Chris Motola has been writing about small business finance and payments for over 5 years. He has been cited in various industry publications, including Forbes Advisor, GoBankingRates, and Medium. Chris is a graduate of the University of Central Florida.
Chris Motola
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21 Comments

Responses are not provided or commissioned by the vendor or bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the vendor or bank advertiser. It is not the vendor or bank advertiser's responsibility to ensure all posts and/or questions are answered.

    Timory Naples

    Is a business allowed to manually enter the check information into the system or does the check have to be scanned? Check scanners are a bit expensive.

      This comment refers to an earlier version of this post and may be outdated.

      Jessica Dinsmore

      Hi Timory,

      A virtual terminal would be great for you. You can ask your POS provider or credit card processor about that option, or talk to your bank. They should be able to point you in the right direction. Good luck!

        This comment refers to an earlier version of this post and may be outdated.

        scott

        Can you please tell me if a convenience fee may be added by a merchant for ACH transactions.

        Thank you!

          This comment refers to an earlier version of this post and may be outdated.

          Jessica Dinsmore

          Hi Scott,

          For a convenience fee to be legal, you have to offer another way for your customer to pay without having to pay the added convenience fee. Usually, convenience fees come into play when credit cards are used, and ACH is offered as the alternative, “free” form of payment.

          Assuming you have another “free” channel of payment such as letting your customer mail a check to you, whether or not you can add a convenience fee to an ACH payment might depend on various federal and state laws. The safest approach we can think of is to go talk to your processor. They should be familiar with the legal issues. In fact, some safer approaches require that the customer split up the payment, with the actual charge going to you and the convenience fee paid directly to the processor. In other words, you’d need your processor’s help to set everything up anyway, so asking them right now is probably the easiest and fastest way to get an answer for your particular business.

            This comment refers to an earlier version of this post and may be outdated.

            Lani Batista

            My company is setup to accept ACH payments we have setup multiple bank accounts to accept the payments. But for the smaller accounts we use a single account. Because we use a single account for all of the small accounts there are various transactions that go through the account. But my bank cant tell me who made the payment for each ACH. The only description that is provided is that of our site where we process the payments. Why can’t the bank tell me which customer is making the payment.

              This comment refers to an earlier version of this post and may be outdated.

              Rose Holman

              Hi, Lani. This sounds like more of a processor issue than a bank issue. In other words — the “site where you process the payments.” I’m not terribly surprised that the bank isn’t just giving you this info. And I’m assuming part of the problem is that a lot of your transactions are the same amount, otherwise you’d use your accounting software to match payment amounts with customers.

              I’d suggest speaking with your ACH processor about how transactions can be reconciled, tracked, and reported in a way that leaves you with a clearer record of transactions. If your bank IS your ACH processor, and you can’t get to the bottom of the system they are using, you might consider switching to a specialized ACH processor with better software to handle and report on this process. Check out this article for assistance with that.

              Best of luck!

                This comment refers to an earlier version of this post and may be outdated.

                Rhea

                In the state of Illinois is it required to have an ACH authorization form filled out with all of the customers bank info? It just seems like requiring that is more of a liability since then you have their info on paper. Does anyone know?

                  This comment refers to an earlier version of this post and may be outdated.

                  Jessica Dinsmore

                  Hi Rhea,

                  To be honest, this isn’t something we’ve ever encountered before, so it may be a bit outside of our expertise. I’d rather not give you an answer that I’m not too certain about. If you happen to figure this out on your own, please let us know what solution you find so we can learn how to answer something like this in the future.

                    This comment refers to an earlier version of this post and may be outdated.

                    John Toston

                    Hey Rhea,

                    Most all states require an authorization form signed, however, this could pose a liability if that authorization with the account information was not stored properly. You can upload this authorization form in a secure file system and/or utilize a way to tokenize the bank account information on the back end with a digital authorization form.

                    Respectfully,
                    John Toston

                      This comment refers to an earlier version of this post and may be outdated.

                      Mike F

                      Regarding processing ACH payments in person (i.e. check scanner), how do you avoid the payer having to first verify ownership of their account? Entering their online credentials w something like Plaid nor verifying microdeposits which can take days seems practical for the check scanner scenario.

                        This comment refers to an earlier version of this post and may be outdated.

                        Tom DeSimone

                        Hi Mike,

                        The usual protocol is to ask for ID and, when possible, to make a copy of the ID as proof. It’s not a perfect system, but it’s not perfect with credit cards either.

                          This comment refers to an earlier version of this post and may be outdated.

                          Mike Jinior

                          Are there any other ACH gateway that anyone is aware of?

                            This comment refers to an earlier version of this post and may be outdated.

                            Chloe Bahal

                            Hi Mike,

                            You might want to check out Stripe.

                              This comment refers to an earlier version of this post and may be outdated.

                              Lillian Angelo

                              I have asked banks, friends and other of HOW TO PROVE PERSON OR COMPANY CHEATED ME OUT OF MONEY BECAUSE ‘FIRST EXPERIENCE’ IN ACH CHECK SYSTEM WAS USED. THERE IS NO ENDORSEMENT OF SIGNATURE/BUSINESS ACCEPTANCE. SO I AM OUT OF $100.00 WITHOUT SERVICE. No proof of their exceptance. HELP, I WANT MY FUNDS BACK.

                                This comment refers to an earlier version of this post and may be outdated.

                                Chris

                                Interesting and enlightening read. Do you think it is possible to bypass the use of merchant accounts altogether by just using your own business checking account with a payment gateway such as Authorize.net? I am currently looking into this.

                                  This comment refers to an earlier version of this post and may be outdated.

                                  Jad Chahine

                                  Hi Chris,

                                  Would be interested in hearing if you were able to bypass ACH. Please feel free to email me at jad (at) moulah (dot) com.

                                  Thanks!

                                  Jad

                                    This comment refers to an earlier version of this post and may be outdated.

                                    Ravi

                                    i need a payment gateway for my india based business. i am not having any one in US
                                    so if any one is able to help me out then reply me or mail me

                                      This comment refers to an earlier version of this post and may be outdated.

                                      Shannon George

                                      Hi there! Thanks for reading! We’ll get back to you about this shortly.

                                        This comment refers to an earlier version of this post and may be outdated.

                                        Tom DeSimone

                                        Hi Ravi,

                                        Check out Instabill. They can usually help.

                                        Good luck!

                                          This comment refers to an earlier version of this post and may be outdated.

                                          Jason

                                          Nice to hear that 25¢ and no percentages for an ACH transaction is a great deal. That is what we charge at GivingTools (www.givingtools.com) and our main issue with potential customers is them not believing that the rates are legit, because they are so low. Thanks for the confirmation!

                                            This comment refers to an earlier version of this post and may be outdated.

                                            Suzanne McMartin

                                            As a merchant accepting credit/debit cards, we have a lot of failed payments due to NSF. It seems lots of people these days use specific debit cards that they load for these payments (for a gym membership) and then they decide to not come back and we are out the money. Is ACH a solution to this? Won’t that be denied too if they don’t have the $ in their account? What is the solution to this as a business owner? We lose so much money from this.

                                              This comment refers to an earlier version of this post and may be outdated.

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