This article is part of a larger series on Payments.
Many businesses, especially those doing invoicing or recurring billing, can benefit from accepting ACH payments, which are convenient, trusted, and cheaper than credit card processing or wire transfers. To set them up, you’ll need a US bank account—or a bank account and a payment processor that handles ACH payments. We cover how to accept ACH payments in five steps, from determining the ACH payments type you will process to getting your customers’ payment details and authorization.
Step 1: Determine the ACH Payments Type You Will Process & How
ACH payments themselves come in two types: ACH Credit or ACH Debit. ACH Credit is where your customer pushes money to you such as authorizing a one-time payment for a product. ACH Debit, on the other hand, is a pull, where it authorizes you to pull money from an account such as for a monthly subscription. Not every payment processor works with ACH Debit, so if you handle recurring billings, be sure to check.
Next, consider how you will be accepting payments. The most common methods are through an ecommerce software, virtual terminal, or sales or CRM software like Salesforce. Of course, invoices are a natural for ACH payment processing, and many payment processors offer electronic invoicing tools that can include a Pay via ACH button.
Most in-store businesses don’t work with ACH, but if you do online and in-person sales, look for payment processors that offer POS systems as well, like Square.
ACH payments are generally not a good fit for in-person transactions or online retail purchases because they require customers to enter their bank account information. In these scenarios, customers would prefer the speed and convenience of a card payment.
Step 2: Choose an ACH Payment Processor
Once you know what you need for accepting ACH payments, you can start looking for a 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.
If, however, you are new to payment processing, then 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)
Virtual terminal, integrations
$25 (25 transactions)
25 cents per transaction after the first 25
Ecommerce, invoice, integrations
Virtual terminal, integrations
0.5% + 25 cents
Virtual terminal, invoice integrations
Virtual terminal, POS, integrations
40 cents to 0.20% + 40 cents
1.9% + fixed fee—3.49% + fixed fee*
$300 US (varies by country)
$15 (for QuickBooks Online)
*Fixed fees vary by country; 49 cents in the US.
**PaymentCloud works with high-risk merchants; thus, its rate varies by company and the risk it presents.
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 you with the tools you need. If you plan on accepting ACH payments using sales or ecommerce software, be sure the processor integrates with it.
If you only need the occasional payment and always via ACH, it might be cheaper to go directly through your bank. Banks often charge $5–$15 per transaction, but if you have high-ticket, infrequent ACH payments coming in, this might be enough. Ask your bank about how to sign up for and receive ACH payments. Note that you need a US bank account.
Step 3: Apply for an ACH Payment Account
If you have a payment processor, then you don’t need an ACH account per-se. The payment processor will accept the ACH payments and pay out to whatever account you choose. However, regulations may require you to have a US account with them. For example, if you have a US Stripe account, it will pay out to any bank. If you do not have a US-based account with Stripe, you cannot process ACH payments at all.
To receive ACH accounts directly or to send out ACH payments of your own, you need a US bank 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, other payment processing, and more.
If you are a US-based business and need to open an account, you’ll need your business information, including incorporation or LLC information, your EIN, and business contact details. (We have a checklist to help you make sure you have it all.) You’ll also want to have some money set aside 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 bank account for complete instructions.
Next, do your research on the best bank for you. Consider factors like fees, business benefits (including payment processing and fraud protection), and more. Our list of the best small business checking accounts is a good place to start your research.
Not a US-based Business?
If you do not have business connections in the United States, then accepting ACH transfers can be more difficult—but not impossible. You’ll need to research payment processors in your area that will process ACH transfers for you. There are foreign equivalents as well. In Europe, they have the Single Euro Payments Area (SEPA), for example. If you have SEPA capability, you can accept ACH.
You may also be able to accept ACH transfers through neo-banks that work with non-resident and foreign entrepreneurs. Mercury is a foreign-friendly online platform that also made our best small business checking accounts list.
Step 4: Set up Your ACH Payment Methods
Setting up ACH payments on your application or through an invoice is often as simple as clicking a button to activate the option. Once it’s set up, your customer will have to provide their bank account information.
Some payment processors, like Stripe, require some coding to activate ACH payment processing.
Some applications let you select ACH as a payment method and then handle the details with your payment processor.
Step 5: Get Payment Details & Authorization From Your Customers
If you are using a payment processor, it will handle the transaction details for you, getting the customer’s bank account information and arranging the transfer. It 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.
If you are going directly bank-to-bank, you may need to give your customer your bank account and routing number, and they arrange the transfer with their bank.
ACH Payment Frequently Asked Questions (FAQ)
What are the advantages of ACH payments?
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.
According to the National Automated Clearing House Association, the ACH network handled over 29 billion payments that totaled over $72 trillion in 2021. Over 20% of those transactions were B2B.
How much does it cost to process ACH payments?
Like with credit card processing, ACH processing fees vary from merchant account to merchant account. The fees are overall smaller 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.
How long does it take to process an ACH payment?
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.
What’s the difference between ACH, e-check, EFT & wire transfers?
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, like the name implies, are digital checks. They’re processed through the ACH network. If the recipient is overseas, then 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 transfer.
- 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.
Can anyone accept an ACH payment?
While international ACH payments are possible, they make up less than 0.5% of the network transactions. If your business and banking are located outside the United States, you may be better off with e-checks or other forms of electronic transfer like the SEPA. Talk with your payment processor for suggestions.
Do all banks accept ACH payments?
The ACH is US-centric, but other countries have similar groups. In India, for example, it’s called the ECS (Electronic Clearing Service) but 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.
Do you need a separate merchant account to process ACH & credit card payments?
Nearly all merchant accounts include ACH and credit card processing. If yours does not, then 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 is a great idea for any business, especially those that work with recurring billing, invoices, or B2B sales. Less expensive than credit card processing in most cases, it’s nonetheless 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 for specific questions.
If you’re new to business and looking for a payment processor that accepts ACH payments, we suggest Chase, especially if you also need a business bank account. Unlike most larger banks, it offers user-friendly payment tools with competitive pricing specifically designed for small businesses. Using it for banking and payments allows for fast deposit times, and it integrates with over 140 other business software.