Blog Posts, Payments

How small businesses can use ACH

Updated: December 2, 2022

As a business owner, it is important to give your customers several options to payment options for your products or services. Not only is it convenient for your customers, but also likely that they won’t buy from you if you don’t feature their preferred payment method.

Accepting direct deposits, credit cards, debit cards, and paper checks as payment options is the norm for most businesses out there. Plastic and checks are convenient for most consumers, but it has drawbacks for business owners.

Credit card transactions come with processing fees ranging from 2% to 4%. Though this may not seem like a problem for small-ticket items, it can quickly add up before you know it. The fees add up if you sell big-ticket items or collect sizable bill payments like rent or tuition. Thankfully there is an easy, cost-effective solution: ACH processing for small businesses.

Benefits of ACH

Small business ACH payments have a number of benefits over plastic and cash.

The first benefit is the cost

The average ACH payment costs around $0.29 flat rate per transaction. Compare this to as much as 2.53% (Visa and Discover), 2.64% (Mastercard), or 3.45% (American Express). In addition to that, there might be a transaction fee from the payment processor that provides the POS terminals or services for your online payments. This means that if you accept credit card payments you either have to pass on the cost to your customers or take a significant hit on your profit margin. None of these are ideal scenarios.

The next benefit of ACH for small businesses is security

In most cases, the ACH network only services American bank accounts which protect businesses from fraud. ACH payments can be revoked, canceled, or even changed after making the transaction. This flexibility makes it harder for fraudulent transactions to be finalized beyond repair. Transactions are also vetted through the ACH network and the crediting and debiting banks participate in the process—something they don’t necessarily do with credit card payments.

The timeline for the disbursement of small business ACH payments is also a huge benefit. Standard ACH payments take 3-5 business days to post. By comparison, credit card payments typically take 2-3 days which is very similar. However, when you use same-day ACH payments, the 1-2 day difference between them can be avoided. According to NACHA, as many as 98% of transactions are eligible for same-day ACH payments. In this case, using the ACH network is faster than Visa or Mastercard and will help you speed up your cash flow cycle significantly.

Even if you are not using same-day ACH, the slightly longer posting time is well worth the money you save on fees. Would you rather pay American Express $50 per collected rent fee or $0.29 to the ACH network? Would you rather pay Visa several hundred dollars for a busy weekend at your business or less than $50 to an ACH processor? Add it up over all the transactions you do throughout the year and the saving quickly ad up.

How you can use ACH

Now that you’ve seen the benefit of ACH payment processing for small business owners, you’re probably wondering how you can collect ACH payments. There are a number of ways to facilitate regular debits from a customer’s account and credits into your business or merchant account.

Collect Information

One way is to collect a customer’s personal and banking information with a paper form, which can also serve as a signed ACH agreement. This form can then be provided to your bank or TPPP, who will set up the ACH payments as indicated on the agreement in terms of amount, date, time period (weekly, monthly, quarterly, annually), and duration. This is a great way to provide the convenience of automated recurring payments to your customers. And without the extra cost of credit card processing,  you can afford to offer incentives for using ACH payements.

You can also set up ACH payments over the phone, but there are additional rules to doing this. The customer must either solicit your services, such as by calling you or requesting them in the course of a conversation. If you initiate collecting ACH payments in the discussion, you must have a preexisting relationship with the customer before making the phone call. It’s essential to understand the rules and regulations to make sure that you don’t incur any fines or end up litigating the process.

Online is Easiest

The easiest way these days to collect small business ACH payments is online. Most business models can accommodate directing customers and clients to a payment portal. The third-party payment processor (TPPP) you use should be able to have a payment form that integrates into your website and your accounting software. Not only that, but they will handle all the backend logistical and legal components to the transaction so you don’t have to worry about setting them up or managing them. Additionally, they will have security measures in place to make sure every transaction is legitimate. This has become a very popular payment method since customers are so used to buying online.

Typically ACH payments are best for charges that will be recurring, whether those are fixed charges like rent, tuition, membership fees, and subscriptions or variable amounts like a utility bill based on usage. But ACH payments are also excellent for one-off sales, especially for big-ticket items and invoice payments.

How to prep your business for accepting ACH

How do you onboard clients and customers for ACH payments? All you really need to do is collect their banking information – like account number and a routing number – and their permission to conduct debiting their account. If you have a TPPP, this process is even easier because it will be integrated into your business operations and accounting.

There are some best practices to follow when it comes to ACH payments. It’s a best practice to send a reminder email or text message before the periodic ACH payment is debited from your customer’s account. This is in addition to providing them with a receipt for the initial setup of the ACH agreement or providing them with a copy of what they filled out if it was signed on paper so they always have the payment details available. If you set up the ACH payment on the phone, you also need to provide a written receipt such as a mailed paper copy or email. The takeaway is that not only is it important to notify your customer for compliance reasons but also because it can help you avoid time-consuming billing questions.

Remember Documentation

When collecting ACH payments, you are required to keep the documentation on file for two years. You don’t need to share the particulars of this process with your customers, but it is the best customer service practice to provide proactive reassurance that you store all banking information securely.

Let your customers know that they can cancel their ACH payment agreement at any time because legally you are required to do so if they indicate as much in writing or verbally. Additionally, consumers like the feeling that the ball is in their court, so  making sure that they are well aware that they can cancel at any time helps establish transparency in your interactions with your customers. It’s important to remember that recurring customers are incredibly valuable, so you want to make sure they always feel valued.


Small business ACH payments are cost-effective, secure, and timely offer a win-win alternative for both businesses and customers. Recurring ACH payments are also excellent for keeping payments coming in on a regular basis and having a predictable cash flow. But even if you only need to accept one-time payments, ACH transaction are a great alternative.

While credit cards are convenient, they can get lost or stolen. Bank account numbers don’t have this problem since they are permanent and have additional layers of security.

If your small business has not yet explored accepting ACH payments, now is the time to check out what Rotessa can do for you. Our ACH authorization tool is free to use and integrates wonderfully into your site and accounting software. Contact one of our account reps today and you’ll see why over 2,000 businesses of all sizes are using Rotessa to collect payments. For more information check out our guide here.

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