How to make merchant payments using ACH

Automated Clearing House (ACH) payments have become increasingly popular among growing businesses for their faster processing times, lower fees, and reduced fraud risk. However, managing ACH payments can be a daunting task for AP teams, especially when dealing with multiple vendors and payment preferences.

In this article, we’ll go over how ACH payments work, why they’re better than checks or cards, and how to get started with ACH.

How do ACH payments work?

ACH payments are electronic funds transfers used to move money between bank accounts in the United States.

To initiate an ACH payment, the recipient must first authorize the transaction. The sender then enters the payment details into their bank’s ACH system, which sends the payment to the ACH network for processing. The ACH network verifies the transaction and sends it to the recipient’s bank for deposit. Once processed, funds are deposited into the recipient’s account, which takes 1-2 business days to complete.

ACH payments are commonly used for recurring payments such as vendor payments, payroll, mortgage and utility payments. They are also used for one-off payments such as online purchases, tax refunds and charitable donations.

ACH payments are considered safe and secure, with the ACH network ensuring that the sender has sufficient funds to cover the payment and that the recipient’s account is valid. ACH payments are faster than traditional paper checks and offer business cost savings compared to credit and debit card processing fees.

Looking to automate your manual AP process? Book a 30-minute demo to see how Nanonets can help your team implement end-to-end AP automation.

Advantages of ACH Payments for Merchants

ACH payments are an electronic alternative to paper checks that offer several advantages to merchants

  1. ConvenienceACH payments are easier to process and faster than checks, saving your AP team manual work.
  2. Lower costsACH payments have lower fees than card payments, which can help save a significant amount of money on transaction costs. Card fees typically range from 2.5% to 5%, while ACH costs about $0.5 per transaction.
  3. Better FollowingACH payments are less prone to fraud than checks, which can help avoid losses due to payment fraud.
  4. Works globallyAlong with domestic ACH within the United States, the ACH network is also interconnected with payment systems in other countries, such as Canada or the United Kingdom.

How to set up ACH payments for sellers

Getting your vendors started with ACH payments can be a simple 2-step process.

  1. Seller Location – Obtaining ACH confirmation and banking information from your merchant.
  2. ACH setup – Connecting your bank account to the selected ACH payment processor.

Set up touchless AP workflows and speed up the Accounts Payable process in seconds. Book a 30-minute demo now!

Get the basics right before a merchant makes an ACH payment.
Get the basics right before a merchant makes an ACH payment.

How to choose an ACH payment processor?

There are several factors to consider when choosing an ACH payment platform for SMBs:

  1. Transaction fees. ACH payments are typically a flat-fee payment type where you’ll pay a fixed transaction fee regardless of the amount being transferred. Many service providers provide competitive rates. look for something under $0.3 per transaction as the sweet spot.
  2. Integration capabilities: Your ACH payments should ultimately be linked to your invoices and visible to your larger team for approvals and supporting documentation. Your payment information should also be linked to your merchant management platform.
  3. Payment options: Yes, this is controversial. why would you want more payment options when you choose to pay with ACH? However, the reality of business today is that different merchants will have different preferences and may choose ACH/checks/wires/card payments as their preferred payment method. Having a solution that covers all of these needs is usually the best practice here.

How to get started with ACH for merchants

For mid-market businesses, integrating their payment platform with accounting and AP processes is usually a best practice. This allows for significant improvements in key AP benchmarks and also reduces costs as revenue increases.

For example, at Nanonets we have made merchant ACH payments extremely simple and straightforward. Our platform achieves two main goals.

  1. Make any ACH/Card/Check/Payment to your vendors
  2. Automatically link to your invoices and approval workflows with transaction-level reconciliation

Call one of our experts and we can get you up and running within 1-2 business days.


Automated ACH payments offer several benefits to both SMBs and merchants, but managing payments along with accounts payable can be a daunting task for businesses. Fortunately, Nanonets offers an automated ACH payment solution that can help customers save time and money.

With Nanonets, customers can automate payment reconciliation, support multiple payment methods, and receive real-time payment status updates. Try it today and enjoy the benefits of automated payment processing.

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