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The American Clearing House, or ACH, is a tool used by many companies to handle their monetary transfers and payment processing. ACH integration comes with many security benefits for the companies involved. As a company’s CFO, you may wonder what factors might cause problems with ACH integration. While the ACH offers many advantages, there are factors with using it that can be a problem. Here are factors to consider with ACH integration.
ACH Works Best In Batches
The ACH provides the best results making automated payments in batches. Transactions that might involve 15 or 20 wire transfers, can be accomplished in 2 or 3 transactions in the ACH. This can save your company considerable money. Universal basic income can also positively impact your company’s financial situation. It can only do so if you need such services though. The ACH does this better than anything else it does. If you don’t need to work in batches with automated payments though, the issues associated with other parts of ACH integration may not make such a service worth it.
You Will Need A Payment Gateway
To access the ACH, your company will need to create a payment gateway. These gateways are provided by a group of third parties who hire them out. This means you will have to pay middle men additional fees just to use the ACH. Many of these providers just communicate with another third party to actually configure payments. This adds a great deal of time to the process. While these fees often still come in under wire transfers, these additional parties can make the process more complicated.
ACH Has Several Types Of Payments
ACH relies on multiple payment types you can use. These types require different types of authentication. Professionals who have taken up finance careers are familiar with these. One form is used for payments by phone, another for the web, another received in check form. This gives you leeway in how you can receive these payments. However, if you choose the wrong type of payment, you will find the transaction blocked. This complexity requires time and knowledge to ensure you make correct payments.
ACH Has Flat Transaction Fees
Despite the complexity of the process, using the ACH may come out cheaper then other options. This is because the ACH charges flat transaction fees. This means that the fee remains stable no matter how much you use it. This is opposed to most credit card processors, who determine their fees as a percentage of all transactions. This means that if you process a lot of payments, the ACH fee will be significantly smaller than other processors.
ACH Payments Take A Long Time To Process
ACH payments take the longest of any payments to process. This is the result of the complexity of the process. Depending on the company running your gateway, you may wait up to 5 days for your payment to be processed. This is opposed to a day in the case of wire transfers and credit card processors. This can be a serious issue unless you plan for it. Such a long processing time can interfere with your cash flow. You may want to look into the option of paperless payroll. Consider how such a time will affect your ability to do business.
Using ACH integration has a number of benefits and hazards that need to be balanced before your needs. The ACH system works best with high quantities of integrated, automated payments. You will need to locate a processing company to create a gateway to the ACH, adding fees. ACH offers a complex set of payments, with different rules and procedures. Flat transaction fees ensure you smaller fees if you have lots of transactions. ACH payments take a long time to process and this may affect your cash flow. With these factors considered, you’ll know whether your company can use ACH integration.
