As an e-commerce entrepreneur, you probably already understand how hard it can be just to get paid for your product or service. Getting money from credit card transactions can be especially problematic if you are a high risk merchant. However, there is another option that you should think about adding to your website’s payment option arsenal: ACH transactions.
E-commerce businesses that trade in high-end products, like nutraceuticals, multi-level marketing, adult products, and coaching, have an especially hard time obtaining and maintaining merchant accounts. A merchant account is what you need to accept credit cards. High risk merchants specialize in enduring significant bank holdbacks to keep reserve balances, excessively high fees, and chargebacks. At E-Commerce 4 IM, we understand what you’re going through; for many years, we’ve been helping small businesses and high risk retailers get the merchant accounts that they need to succeed. If you’re looking to put more of your hard earned money directly into your pocket, then ACH transactions may be an excellent option for you.
What is an e-check, or ACH Transaction, Anyway?
ACH is an acronym that stands for Automated Clearinghouse System. To receive payment through an ACH transaction, your customer provides you with their banking details, either through your website or over the phone. The ACH bundles payment requests into a “batch” and then moves the money electronically directly between financial institutions. In other words, funds transfer directly from account to account. However, there is more to it as there’s an intermediary step. The Federal Reserve banks and the Electronic Payments Network are responsible for bundling the transactions and settling the payments between the originating and receiving banks. All of this happens electronically, and your business is the beneficiary. After all, the Federal Reserve and the EPN maintain these networks. In other words, the Federal Reserve and the EPN assume and manage much of the security risk we associate with ACH transactions.
What’s the Down Side of ACH?
There are always strings attached regardless of what payment option you choose, and ACH is no exception. The power of a credit card is this: if your customer has insufficient credit remaining, they won’t be able to buy your product. In short, they check the availability of those funds up front.
That is not the case with ACH. All that is checked is that the customer’s banking information is valid. On the negative side, the ACH makes no guarantees that the customer’s bank account actually has the money in it to pay for the transaction. To put it another way, you may not find out until a couple of days post-sale that the charge returns to you as NSF—insufficient funds. In other words, NSFs are the real risk of accepting ACH as a payment method. It’s certainly something worth bearing in mind.
What are the Advantages of Providing an ACH Payment Option for Your Customers?
Simply put, ACH transactions are faster and cheaper for you, the merchant. There are no reserve requirements for ACH transactions. Also, there are no interchange fees. Interchange fees often represent the most significant percentage of the fees from each credit card transaction processed through your merchant account. The interchange fee is the price your merchant bank pays your customer’s financial institution for the privilege of doing business with them. Because there is no interchange the costs are drastically reduced. In fact, the total fee charged to your company for an ACH transaction can often be less than 1% of the sales price of the item or service you are selling – depending on your industry.
ACH transactions are relatively speedy, especially when you compare the processing time to a paper check. Typically, you’re looking for two to three business days for processed payments to post to your account. Additionally, you won’t be paying high fees and unreasonable rates to the banks. Overall, you can rest assured that you’ll be keeping more of your hard-earned money. ACH isn’t a revolving credit card system, as opposed to bank cards.
How E-Commerce 4 IM can Help
As an industry leader in e-commerce solutions and high risk merchant account services, E-Commerce 4 IM is the perfect company to help you use ACH to build your business into the vibrant enterprise that you want it to be. We specialize in e-checks, chargeback mitigation, credit card processing, funding, and a whole lot more. Contact E-Commerce 4 IM today at 1-800-570-1347 or on here.