Business Finance

Why Businesses Should Choose ACH Payments Over Credit

Why Businesses Should Choose ACH Payments Over Credit

Credit and debit cards have become the most popular payment option according to the Federal Reserve. The number of credit and debit card transactions will continue to grow over the years especially as the digitization of payments catches on. While this is true, a lot of businesses are looking for an alternative payment option and they are turning to ACH. If you are wondering why, the reasons largely revolve around the disadvantages of accepting debit cards, credit cards, and cash.

Low Transaction Fees

While convenient, the main downside of credit and debit cards is their transaction costs. The high processing costs associated with these cards can eat into profits, especially for businesses that do lots of them and whose margins are razor-thin.

The funds transferred in an ACH payment go through a clearing house where the fees can be as low as a few tenths of a cent per transaction for smaller transactions. Some processors charge 1 to 1.5% for large transactions and cap these fees at $5. Credit cards, on the other hand, have charges that can go as high as 3.5%.

Better User Experience

Most businesses now have an online store and many of them accept credit and debit cards. The use of these cards requires customers to enter their credit card number, expiration date, verification code, and address.

Modern tools like Envestnet l Yodlee FastLink provide a better user experience by making account linking intuitive, secure, and fast for a better user experience. Their validation and verification process does not require routing numbers, account numbers, or micro-deposits, and it happens in near real-time. Businesses can benefit from other Yodlee ACH payments services such as faster ACH debit processing. Yodlee ACH payments also help reduce fraud and risk while reducing costs at the same time.

Reducing friction from using such solutions helps improve customer experience and increases the number of people who complete their transactions.


Credit card fraud is a serious issue for both businesses and customers. Businesses have to be aware that the credit or debit card used in their store or on their website could be stolen which would mean a loss if the card owner requests a refund.

ACH removes all these fears and concerns because it is a direct payment option without intermediaries. Because some customers could be hesitant about the business, the two parties could initiate micro-deposits so the parties know each other.

A customer verifies the amount to send before initiating the transaction. The business ensures the customer details are correct and that there are no issues with the customer’s account that could cause the transaction to fail.

Recurring Billing

ACH is perfect for businesses with a subscription model as it allows for easier recurring billing. It also saves businesses time and money by automating the process as long as a customer has linked the right account and has not ended their subscription.

Now that you understand why you should use ACH payments, you can switch from accepting credit and debit cards. Alternatively, you could accept the two to give your customers the best experience possible.

About the author


Steven Ly

Steven Ly is the Startup Program and Events Manager at TheNextHint Inc. She recruits rockstar startups for all TC events including Disrupt, meetups, Sessions, and more both domestically and internationally. Previously, she helped produce Dreamforce with Salesforce and Next '17 with Google. Prior to that, she was on the advertising teams at both Facebook and AdRoll, helping support advertisers in North America and helped grow those brands globally. Outside of work, Priya enjoys Flywheel, tacos, the 49ers, and adventuring around the globe.

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