ACH stands for Automated Clearing House, a payment method commonly known and used in the United States for moving money. It has been arond since the 1970s, so it’s nothing new for the payments world, and it continues to one of the biggest payment networds used in North America. Many businesses in Canada also use this payment method, which is commonly used to move funds from the US to Canada and vice versa.
What Is the ACH Network?
The ACH network is a form of bank to bank payment facilitator, meaning payment do not go through a third party such as Visa or Mastercard. Instead, they are processed through the ACH governing organization Nacha, or the National Automated Clearing House Association.
ACH Payment Processing
Even though ACH payments go through Nacha, there are many businesses that use an ACH processor or facilitator to make their payments happen. They make the process of setting them up easier and also allow for payments to be automated, saving time and money.
A good ACH payment processing company should deliver fast, safe, and reliable payment solutions through a strong connection with a banking partner. When looking for an ACH payment processing service, there are several things you need to consider, including fees, transparency and speed. If you need to make or receive and ACH payment in Canada you will want to work with a company that is experienced with payments between the US and Canada.
Types of ACH transactions
Electronic payments are used for different kinds of transactions. This includes both direct deposits and direct payments like:
- Paying bills automatically from your checking account
- Making one-time payments
- Direct deposits from an employer to employees
- Transferring funds to different bank accounts
- Employee expense reimbursement
- Interest payments
ACH transactions vs. e-checks
Most people use ACH payments and e-checks interchangeably. Both options are used to transfer funds electronically between two bank accounts. E-checks can be a good option if you need one-time payment. But ACH payments are recommended if you have recurring transactions like paying employees.
Benefits of ACH transactions
Automation
ACH transactions can be automated to save time on entering the transaction details. This makes them a good option for businesses with recurring bills. It allows businesses to make early payments and benefit from early payment discounts.
Cost-saving
Making an ACH payment costs less compared to traditional paper checks. This can save the business a lot of money on transaction costs.
Fewer resources
Since payments are made automatically, businesses spend less on resources.
Tracking
Automated payments also make record-keeping easier. With ACH payments, you can easily track business income and expenses. All the transactions are automatically recorded. This makes accounting and financial management easier for the business.
Easy to manage
With traditional paper checks, it may take some time to receive payments from clients. The payments may also get lost in the mail. Once you receive the check, an employee has to key in the details manually. This can slow things down for the business. But ACH transactions are instant. Each transaction is automatically entered into the system.
Choosing An ACH Processor
If you are looking to work with a company to process your ACH payments in Canada, there are a few things that you should carefully consider before working with them:
Security
ACH payment processing companies store delicate customer information on their database. A reputable service should use high-level encryption to protect confidential customer information. The company should also offer some kind of fraud protection. This can help investigate cases like delayed payments.
Transaction costs
It is also a good idea to compare the prices an ACH payment processing company charges. There are plenty of reliable and affordable ACH payment services available. You should do some research in order to find one that offers affordable services. Ensure that you go through the company’s policies and terms and conditions.
