Perhaps you are considering setting up an ACH billing system that will serve your business. Just like in any other business initiative, there are a few considerations you should understand to guide your decisions and see you through the process. Here are seven primary factors you must know.
- ACH billing usually tends to have lower transaction fees
Though not always the case, ACH billing typically have lower transaction rates that may just favor your business in terms of revenue. This happens in cases where the company processor charges a flat transaction fee. With this kind of a billing scenario, a larger average ticket will mean that you save more.
- ACH billing is separate from a debit card transaction
Some people are fully aware of this, but others may not be. Both the ACH billing and the debit card transaction come out of the customer’s bank account. They are however processed using entirely different forms. As such, the transactions will involve completely different chargeback policies. In the event that you have to attend to issues regarding customer transactions, you may have to contact a different party unless you have your 3rd party software provider handling all the customer support.
- There are different processing times for ACH billing
Processing a credit card transaction can take up to 2-3 days. ACH billing, however, will normally take longer to process, up to 3-5 days, though most banks give preference to ACH transactions. That is why you will typically have easier time handling ACH check processing compared to other paper checks when you are processing funds.
- Payments on ACH billing can also return as NSF
ACH payments are not entirely free from the NSF cases. They can normally return as NSF even if the transaction successfully goes through in the first instance.
- ACH transaction fees are debited separately from the other transaction costs
The ACH transactions are treated independently, and the fees are debited separately from your other costs of transactions.
- You will typically require authorization on ACH billing
This is just similar to any other payment form. You will have to obtain your customer authorization to process ACH billings.
- There are different dispute policies on ACH billing from credit cards
The NACHA (organization responsible for the Automated Clearing House) provides for only three reasons why people can dispute any ACH charges effected to their account. These are: missing authorization from the account holder, processing made on date earlier than the authorized one, and processing of amount different from the one authorized.
With these details well understood, you can proceed to set up a working ACH billing system and operate without running into any issues from that point going forward.