HOW DO ACH PAYMENTS WORK
According to the United States Federal Reserve, there are tens of billions of ACH payments made every year. Conceived in the early 1970s, an Automated Clearing House transfer is a way of electronically moving money between accounts at different banks. These transfers allow you to receive or send money safely and conveniently.
You might even be using ACH payments without realizing it. For example, if you’ve ever been paid via direct deposit, then you’ve accepted an ACH payment.
Paying bills online through your bank account is another example of a common Automated Clearing House transfer. You can use ACH payments to make recurring or one-time deposits into an IRA, a college savings account, or a taxable brokerage account. For business owners, you may choose to use ACH payments to receive money from clients or to pay your vendors. They tend to be more user-friendly and cost-efficient than writing checks.
WHAT ARE ACH TRANSFERS
An ACH transfer is a bank-to-bank, electronic money transfer that is processed through the Automated Clearing House (ACH) Network.
The ACH Network is a batch processing system. Banks and Merchant Cash Advance companies use the network to aggregate ACH transactions for processing.
The ACH Network processes two kinds of ACH payments: direct deposits and direct payments.
ADVANTAGES OF ACH TRANSFERS
When you use an ACH transfer to make person-to-person payments or pay your bills, there are a number of advantages. First, you have the benefit of convenience. When you pay your utility bill, mortgage, or other recurring expense with an electronic ACH payment, you’re going to have a much simpler experience than writing and sending a check.
You’ll also get to save on having to pay for stamps and other supplies. The cost-saving benefits are also an excellent reason why you should add ACH to your integrated payment solutions.
When you receive and send ACH payments, the process is usually very quick. The transaction is typically settled by the day after the Automated Clearing House payment is initiated. ACH credits need to settle in one to two days, and ACH debits need to settle by the next business day.
HOW SAFE IS AN ACH PAYMENT?
In some ways, ACH is safer than writing checks. First off, you only need to enter your bank account information once in order to establish an ACH. With paper checks, however, you need to expose your bank information each time you write a new check.
A check also can get stolen or lost. An Automated Clearing House payment will move money straight from your account to the intended recipient.
If you do encounter any fraud or ACH errors, you’re protected under federal law. The only catch is that you need to report any problems to your Merchant Cash Advance within sixty days.
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