How To Set Up ACH Payments For Your Business: The Step-By-Step Guide

ACH payments are safe, easy, and reliable. If you’re not already using them, it may be time for your small business to start accepting ACH payments. This post will cover everything you need to know about how to set up ACH payments, including need-to-know details about ACH fees.

But first, if you’re still researching ACH payments and wondering if you should set up ACH payments for your small business, start with our basic guide to ACH payments. (You’ll learn, for example, that ACH stands for Automated Clearing House, an electronic payment network run by an organization called Nacha that monitors member banks and credit unions and enforces ACH standards.)

Once you understand these ACH basics, you’ll be ready to learn how to set up ACH payments. So keep reading for a deep dive into the world of ACH payments, including how to find ACH payment processors, suggestions for using ACH payments to save time and money, and what your small business can expect to pay for ACH services.

Why Accept ACH Payments For Your Small Business?

Accepting ACH payments brings several benefits to your small business receivables. Here are some of the top advantages of using ACH payments instead of credit cards or checks:

ACH Payment Processing Fees Explained

ACH processing fees deliver a major advantage when compared to credit card processing costs and the fees associated with depositing checks and even cash. Like all types of payment processing fees, ACH processing fees come in a range that depends on what processor you use:

• Merchant Services Provider
• Business Banking Service
• Payment Service Provider (PSP)
• High-Risk Processor

With the understanding that ACH fees can vary, let’s take a look at how typical ACH fees stack up to some other common forms of payment:

As you can see, the cost of ACH is lower than credit card fees and check fees in many cases. Keep in mind that ACH processing fees may be listed as a percentage, a flat fee per transaction, or both. Whether a flat fee or a percentage will be better for your business depends on your typical transaction size but, in general, a flat fee will be better for many business types.

Don’t forget that many business bank accounts allow you to accept a certain number of unlimited ACH transactions with no processing fees. It may be better for your business to process ACH transactions through your bank, rather than through a merchant services provider or PSP. Again, it depends on your business. Knowing the fees associated with your bank and payment provider is the key to making the right decision for your business.

Now let’s look at these and other fees you may run into when you start accepting ACH payments:

• Percentage Fee: If your ACH pricing includes a percentage fee on each transaction, you’ll be looking at a range of 0.5%-1.5%. That is significantly less than the range of credit card fees, which can go up to 3.5% or more.
• Flat Fee: You may be charged a flat fee by your provider for each ACH transaction processed. These ACH processing fees can run from $0.20-$1.50/transaction. That’s higher than the flat fees you might pay on a credit card transaction. Keep in mind, however, that credit card processors typically charge both a percentage and a flat fee.
• Setup & Monthly Fees: Traditional merchant services providers may charge around $15-$30/month to add ACH processing to your account. However, many providers will allow you to include ACH processing at no additional monthly cost. Again, it pays to be aware of the fees, so you can make the best choices.
• Reversal Fee: When customers dispute an ACH payment and you’re faced with a reversal or chargeback, you could be looking at an additional fee. Keep in mind that ACH reversals are significantly less common than credit card reversals, and customers have less time and fewer reasons to challenge ACH transactions. ACH reversal fees range from $2-$25, depending on your payment processor.

Now that you’ve got a sense of ACH pricing basics, you might want to learn more about how they compare to typical credit card processing fees.

Finally, as you compare options and think about how to accept ACH payments, remember that it’s possible to find options, including business bank accounts and payment providers that charge no or low application fees, setup fees, or monthly fees. Some top processors for low-cost ACH include PaymentCloud, Square, and Helcim.

What Do You Need To Accept ACH Payments?

Setting up to accept ACH payments is really no more complicated than preparing to accept most other forms of payment from your customers. That doesn’t mean you won’t need to put in a little effort — but don’t worry, it won’t be too hard.

And, once you’re set-up, accepting ACH payments is almost entirely a hands-free operation. To get you started, let’s take a look at the information you’ll need and the steps you will take to set up one-time and recurring ACH payments from your customers.

Information Needed For ACH Transfers

• Business Bank Account Information:  You’ll need your business bank’s routing number and your checking or savings account number.
• Customer Payment Information: To process an ACH payment, you’ll also need the payer’s bank routing number and checking or savings account number.
• Virtual Terminal Or Web Form: To process payment for mail orders and telephone orders, you’ll need to key in payment information. For website payments, you’ll need a web form to collect information on your online store’s sales checkout page.
• Payment Processor: If you’re taking ACH payments online, you’ll most likely want a payment gateway to transmit the data required for the ACH transaction.
• ACH Authorization Form: If customers are paying in person or through the mail, rather than online, you’ll probably ask them to complete an ACH authorization form that includes the following: names and contact information for both the payer and the payee, payment details including amount and schedule (one time or recurring), a statement authorizing the form, and an explanation of how to cancel the agreement, including how much notice is required. Be sure to date this agreement, and add both the payer’s and the payee’s signature.

Do You Need Anything Else To Set Up ACH Payments?

The easiest way to set up ACH payments may be through your business bank account. In that case, you’ll simply share your bank information with your customer and ask them to initiate payment.

If you’re planning to use a third-party payment processor, you will need to pick a provider. The simplest option may be to add ACH as a payment option with your current provider, although you may want to research costs before you take this route.

If you’re starting from scratch, check out our comparison charts for merchant accounts or accounting software as a jumping-off point for your search!

How To Set Up & Accept ACH Payments

If you like what you’ve read about accepting ACH payments and want to get started saving money and see more secure customer payment methods, you’re in the right place.

Here are five things you can start doing today:

Step 1: Pick A Provider

If you’re already using a merchant service account or payment gateway provider, it makes sense to start your search there. If you’re just starting your quest to accept payments, we suggest you take a look at our list of the best payment processors that provide ACH and credit/debit card payment processing in a single package.

Be sure you understand the terms and conditions for using ACH payments with the payment provider you choose. You’ll want to be especially aware of application fees, account setup fees, and monthly fees that could affect your income. Look at the ACH payment processing fees, too, and make sure it’s a good one that compares favorably to credit card processing fees. If it seems high, keep looking.

Step 2: Set Up Your Account

If you already have a merchant account with a payment processor, this can be as easy as adding ACH as a payment option. Be aware that you may need to undergo a separate underwriting process, however, and you may need to pay additional fees to set up ACH payments.

If you’re planning to use a bank account to accept ACH payments, you will need to set up a business bank account, if you haven’t already. Once your bank account is active, you’ll simply provide customers with your bank’s routing number and your account number. Your customers will set up ACH payments, with no further work needed on your end.

Step 3: Tell Customers About ACH Payments

ACH payments are advantageous not only for the business accepting them but also for the customers who make them. Studies show that the costs of issuing a paper check for a business expense averages around $6 per check, including postage, supplies, and employee time devoted to the details.

It’s rare to find a business bank account or corporate credit card that does not offer free bill payment services. These services are a type of ACH transaction. So rather than spending time and money, and rather than exposing themselves to the risk of lost mail and identity theft, your customers can pay you safely, securely, and for free using ACH payments.

All you have to do is let them know how. We’ll share some suggestions for doing that in the next section below.

Step 4: Collect & Share Payment Information

If you want to use ACH payments to replace paper check payments, you’ll need to share your business bank account information with your customers and share your own with them. That information is required to initiate the ACH transfer of funds.

If you’re using ACH to replace credit card payments, particularly from online sales, you won’t need to share as much information. In fact, your customers should be able to enter their information on your online store, using a special web form, and initiate the ACH transaction on their own.

Step 5: Start Accepting ACH Payments

Once you’ve picked a payment provider and laid the groundwork there, letting your customers know you prefer ACH payments over paper checks and, in some circumstances, over credit card payments, you’re ready to start accepting ACH transactions.

To make sure your customers are aware of this payment option, you may need to highlight ACH payment details on your online store’s checkout page or on the invoices you send out via mail or email.

How To Get Your Customers To Pay By ACH

When it comes to thinking about how to set up ACH payments, the old saying about old dogs and new tricks definitely comes to mind. It may not be easy to get your customers to give up on credit card and paper check payments!

Although encouraging customers to move to ACH payments may take time and effort, it’s usually worth the effort. So here are some strategies that can help you along the way:

Is Accepting ACH Payments Right For Your Business?

By now, you’ve probably gotten a good sense of how ACH payments work and whether you should add ACH to your payments mix. If you’re still not certain if ACH transactions are right for your organization, we’ve broken it down for you here.

Key point: Even if you’re not sure that ACH payments are the best fit for your business, it may cost you nothing to add it as a payment option. And more payment options usually are better than fewer.

Add ACH Payments If …

• You have customers with recurring orders
• You sell subscriptions or memberships
• You process B2B transactions
• You have a majority of repeat customers who purchase regularly from you, even if their orders and transaction totals vary
• You operate a high-risk business that currently cannot qualify to accept credit and debit card transactions
• You are looking for an alternative to high credit card transaction fees
• You want to encourage on-time payments, without having to chase them down

You May Not Benefit As Much From ACH Payments If …

• Most of your sales are from one-time customers
• The majority of your sales are face-to-face transactions
• Overseas transactions are a significant portion of your sales
• Instant revenue is enabled by your bank, eCommerce platform, or payment processor

Next Steps For Accepting ACH Payments

The benefits are clear. Once you understand how to set up ACH payments, your small business should grab the opportunity to make your customer payments safer, more secure, and less expensive to process.

Whether the majority of your business transactions occur online, over the phone, or through the mail, you can benefit from accepting ACH payments that electronically transfer funds from a customer’s checking account directly into your own account.

ACH transactions may become your preferred payment method, or simply a choice in a variety of payment options that include alternative payment methods like digital wallets, cryptocurrency, and more.

You’ll make more sales and find it easier to collect payment when you allow customers to choose the payment method that works best for them. That may include cash apps such as Zelle for Business. It’s worth taking the time to learn how to accept ACH payments, so you can give customers one more payment option and — hopefully — capture the sale.

Common Questions About Setting Up ACH Payments