What is ACH? How Automated Clearing House affects online payment processing

Definition: The Automated Clearing House, or ACH, is a batch processing system regulated by the non-profit National Automated Clearing House Association (NACHA) for all electronic funds transferred in the United States. The ACH has grown to support more than 90% of all electronic payments as more and more businesses conduct business online.

Enabling ACH payment processing on the BigCommerce platform requires custom development. Contact a development partner to learn how to add ACH processing to your store. 

Benefits for Retailers

By processing payments through ACH, online retailers have greater control over payments and are able to increase payment accuracy, improve forecasting and access funds with greater speed and visibility. With ACH, payments are usually processed within one to two business days and many can be processed on the same day. This allows retailers to ship items faster.

With the ability to process orders more quickly, ecommerce merchants also maintain customer retention. Customers are more likely to return to a particular online store that they can rely on to safely take their payment information and ship their items in a relatively short time frame.

Benefits for Consumers

One of the most frequent reasons given by consumers for not purchasing online is the fear of personal information falling into the wrong hands. The NACHA is committed to providing a secure way to purchase online through ACH payment processing.

In addition to secure transactions, online shoppers receive their purchases faster. There is nothing worse than ordering an item and having to wait weeks for it to arrive. With ACH payments being processed so quickly, many items are able to be shipped within one to two business days.

Transactions Processed Through ACH

If a Unites States retailer is conducting business online, chances are the payments they make and receive are being processed through ACH. The ACH processes two types of transactions that can be further broken down into the following categories:

Payments:

• Direct deposit - a wide variety of consumer payments including payroll
• Cross-border - payments to Canada, Mexico, Panama and parts of Europe
• Trade - payments to suppliers via CCD+ and CTX formats including payment details
• Tax - payments to local, state and federal government agencies

Receipts:

• Consumer debit - one time and recurring payments from consumers including membership fees and online purchases
• eCheck - purchases made via eChecks are converted to ACH debits and transmitted electronically for collection processing
• Corporate - payments from suppliers via CCD+ and CTX formats, which also relays payment details such as date, discount and invoice number