How to Accept ACH Payments as a Small Business
This article is part of a larger series on Payments.
Accepting ACH payments is a convenient and trusted method of processing transactions—and cheaper than credit card processing or wire transfers. It can be particularly useful for recurring billing, invoicing, and B2B payments. To accept ACH payments, you first need to decide how you’d like to receive the payments, and then choose your ACH payment processor, register for an ACH account, and set up ACH payment as an option for your customers.
Continue reading for how to accept ACH payments in five easy steps.
Before you explore accepting ACH payments, it is important to understand what they are and when they are good for your small business.
What is ACH? The Automated Clearing House is the main computer-based network in the US used for processing electronic funds transfers. It handles the transfer of funds from one bank account to another. If you’d like to learn more, read our small business guide on ACH Payments.
Best Use for ACH Payments
Does not require any credit or debit card
Takes longer to process
Requires more detailed information from the customer
Step 1: Decide How You Would Like to Receive ACH Payments
There are two types of ACH payments—ACH credit and ACH debit—and the difference between them is in who initiates the transaction.
With ACH credit, the transaction is initiated by the sender. It is similar to the account holder requesting or asking the bank to transfer the amount from their account to the receiving bank account. ACH credit is considered a “push” transaction because the paying account pushes the amount into the receiving account.
If you would like to accept payments as ACH credit from your customer, you need a bank account that can receive ACH transfers and then provide your bank details to your customer.
With ACH debit, the transaction is initiated by the receiver. The customer provides the merchant with their bank account information and the necessary authorization. Then, the merchant’s bank uses the information to request that the amount be transferred from the customer’s account to the merchant’s account. ACH debit is considered a “pull” transaction because the amount is pulled from the paying account to the receiving account.
If you want to receive payments as ACH debit, you will need a payment processor to handle ACH transfers. Payment processors that allow ACH payments will have their own payout processes, and most of the time, it is not necessary for you to have a bank account that can receive ACH transfers.
Step 2: Choose an ACH Payment Processor
If you’ve decided that you only want to receive ACH credit payments, you do not need an ACH payment processor. You may proceed to step 3.
Meanwhile, the best way to accept ACH payments via direct debit is through a payment processor. If you already have a payment processor for accepting credit card payments, see if it also handles ACH transactions. It could be as easy as adding the option to your invoices or checkouts.
Want to accept credit card payments as well? Read our guide on how to accept credit card payments online.
If you are new to payment processing, you’ll probably want a merchant account and payment processor that handles both ACH and credit card payments.
Best Overall Payment Processors for ACH Payments
ACH fees (per transaction)
ACH fee cap
Ecommerce, invoice, integrations, payment links
2–4 business days (based on eligibility)
Virtual terminal, invoice, integrations, payment links
0.5% + 25 cents
3–4 business days
Virtual terminal, invoice, integrations
2–3 business days
2–3 business days
1.9% + 10 cents—3.49% + 49 cents
3–5 business days
Within 24 hours
Virtual terminal, POS, integrations
40 cents to 0.20% + 40 cents
2 business days
1–2 business days
*PaymentCloud works with high-risk merchants; thus, its rate varies by company.
**Square has a $1 minimum for ACH payments; all the other providers do not have a minimum.
As you make your decision, consider the following:
- Fees: Think about standard rates, transaction fees, monthly fees, monthly minimum requirements, maximum charges, penalties for returned checks, and extra fees. PayPal, for example, charges extra for its virtual terminal, whereas Helcim offers this for free.
- Your business type: High-risk businesses often need particular payment processors like PaymentCloud. Meanwhile, high-volume businesses may qualify for discounts or are better off with payment processors that charge a monthly fee but have interchange-plus pricing, such as Dharma Merchant Services.
- Tools: Be sure the payment processor provides the necessary tools. If you plan on accepting ACH payments using sales or ecommerce software, be sure the processor integrates with it.
Step 3: Apply for an ACH Payment Account
To allow your customers to pay via ACH credit, you will need a US bank account that can receive ACH transfers. Any bank account that can send ACH payments may also receive them. Your customers can then send their payments to your bank account by liaising with their bank or through their banking app.
If you’ve decided to receive ACH payments via a payment processor, you might not need an ACH payment account, especially if your chosen provider comes with a merchant account. Check with your payment processor on the requirements to enable ACH payments.
Going directly through your bank might be cheaper if you only need occasional payments and always via ACH. Banks often charge $5–$15 per transaction, but if you have high-ticket, infrequent ACH payments coming in, this might be enough.
If you do not have a US business bank account yet or your existing account does not allow ACH transfers, you will need to open a US business account. Otherwise, the ACH system will process the payment as an international bank transfer to your non-US account. This could result in conversion or other fees, as your bank determines. We recommend Chase, which offers business accounts, ACH processing, and other payment processing.
Chase is one of our top-recommended payment processors and our leading bank for small businesses. It also offers a great small business checking account, so if you’re a new business looking to set up ACH payments, it has everything you need to get started.
US-based businesses that need to open an account need their business information, including incorporation or LLC information, the EIN, and business contact details. (We have a checklist to help you make sure you have it all.) You’ll also want to set aside some money to open the account; this can be as little as $5 but varies by bank. Check out our guide on how to open a business account and our rundown of the best small business checking accounts.
If you do not have business connections in the US, then accepting ACH transfers can be more difficult—but not impossible. You’ll need to research financial technology companies that work with non-resident and foreign entrepreneurs and offer ACH bank details when you sign up for an account. Mercury is a foreign-friendly online platform that also made our best small business checking accounts list. Other options are Globalfy, Payoneer, and Wise.
Step 4: Enable ACH Payments
To allow your customers to send their payment via ACH credit, you only need to provide them with your bank details, such as your bank’s routing number and account number. When your customer has confirmed that they have sent the payment, check your account to verify that the payment has gone through.
If you’ve chosen to use a payment processor, enabling ACH payments on your application or through an invoice is often as simple as clicking a button to activate the option or configuring some settings in your account. Once it’s set up, your customer needs to provide their bank account information.
Some processors like Helcim will allow you to turn on ACH Payments with just a button or a toggle on your dashboard. There are others like Stripe that require more in-depth coding. Check your processor’s documentation if the ACH payment option is not readily available from your provider dashboard.
Step 5: Get Payment Details & Authorization From Your Customers
You only need this step if you use a payment processor. It will handle the transaction details for you by getting the customer’s bank account information through a virtual terminal, an invoice, or a payment link, and then arranging the transfer. Your processor then sends the payment request to the customer’s bank, takes the payment, and after processing, transfers the money to your account (minus processing fees). It’s as easy as accepting credit card payments.
Consider providing some incentive to customers for choosing ACH payments. Some customers may balk at ACH payments, which require them to find their banking information. Compare this to the one-click ease of PayPal, for example. However, since it’s cheaper than PayPal or credit card processing, it might be worth offering a discount or a free month on a long-term subscription.
ACH Payments Frequently Asked Questions
ACH payments are an increasingly popular payment method for both customers and vendors for several reasons:
- Cheaper: Payment processors usually charge less for ACH transfers than credit card processing. (PayPal is an exception.)
- Easy: They are as convenient to use as a credit card.
- Great for recurring payments: Customers can set up recurring payments on their schedule, like on paydays, making it great for utility-type billings.
- Don’t expire: Unlike credit cards, which expire or get lost or stolen, ACH payments are bank-to-bank, so the only potential problems are insufficient funds or account closures.
Like with credit card processing, ACH processing fees vary from merchant account to merchant account. The fees are overall lower than those for credit card processing, however. (PayPal is an exception to this, as it charges ACH fees with the same schedule as other card processing.) The prices listed in our chart above give a good idea of what to expect, but check with your specific merchant account.
ACH Credit payments usually take one to seven business days. ACH Debit payments, however, must be processed by the next business day. After that, your payment processor may hold the payment for a period.
There is the possibility to get same-day ACH processing, and it has grown in popularity; it’s more often used for transactions like loan payments or utilities and allows the payment from the customer to you to be processed on the same day. That does not mean you get the payout on the same day, however, as most payment processors do not guarantee same-day payout. Contact your payment processor for more details.
The differences between these types of payments are small. All are types of electronic transfers of funds between banks.
- ACH: A bank-to-bank transfer of funds through the Automated Clearing House. Most payment processors handle them and charge a small fee. Most ACH payments are US-only.
- E-check: E-checks, as the name implies, are digital checks. They’re processed through the ACH network. If the recipient is overseas, they can pay via e-check rather than ACH, and the payments are processed as international local bank transfers.
- Electronic Funds Transfer (EFT): This is a catch-all term for the transfer of funds electronically between banks, ACH, e-check, and wire transfers.
- Wire transfer: Processes in real-time with delivery in a few hours. It can cost up to $30, and most payment providers don’t process them. Wire transfers cannot be reversed.
Anyone with a US bank account capable of ACH transfers can accept ACH payments. If your business and banking are located outside the US, you may be better off with e-checks or other forms of electronic transfer like the SEPA. Talk with your payment processor for recommendations.
The ACH is US-centric, but other countries have similar groups. In India, for example, it’s called the ECS (Electronic Clearing Service) but it works the same way. Thus, customers in India can use ECS to make “ACH” payments. For a company in India receiving an ACH payment from a US customer, the ACH debits the customer’s account and transfers the money to your account in India.
Nearly all merchant accounts include ACH and credit card processing. If yours does not, it may be a good time to switch. Consider the ones listed above, or check out our top merchant services for small businesses.
ACH payment processing for small businesses is ideal for those with recurring billing, invoicing, or B2B sales needs. Less expensive than credit card processing in most cases, it’s secure and easy for you and your customer. Most payment processors can handle ACH payments and include the function in their services. Contact your payment processor and learn how to set up ACH payments for your business.