The automated system of ACH payments has made fund transfers hassle-free. Have you ever wondered how salaries, benefits, and tax refunds are credited to your account on time? After your approval, organizations and government entities can transfer funds to your bank account through Automated clearing house (ACH) payment systems.
What is ACH?
The Automated Clearing House (ACH) Network is an electronic funds-transfer system. National automated clearing house association (NACHA), a non-profit organization, has been operating and regulating ACH networks since 1974.
ACH networks facilitate online bank-to-bank fund transfers in the US, whether credit or debit. Businesses, Individuals, financial institutions can use the ACH payment system to send or receive funds. An increase of 11 percent has been observed in ACH payments from 2019 to 2020.
Government entities, consumers, and businesses use the ACH payment system for an automated debit or credit transfer. Upon checking on the internet, I came across an online check writer app, which facilitates free ACH payments. You need to create an account with your credentials and link your bank account to set up automated fund transfers.
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How do the ACH networks transfer funds?
Let's get to know how ACH network transfers funds. ACH networks act as a financial hub and help individuals, organizations to transfer funds. NACHA is a self-regulating institution with its own rules to control ACH networks. ACH networks, the association responsible for transfers, is a batch processing system that financial institutions and banks use to aggregate these transactions for processing, typically three times in a business day.
Types of ACH transfers
ACH transfers make fund transfer easier for both payer and the payee. You don't need to wait for a check to clear or walk your bill down to the electric company to make a payment. Your dues can be paid on time conveniently and securely from your home. The two types of ACH transactions are direct deposits and direct payments.
ACH Direct deposits
ACH Direct deposits are electronic fund transfers made from a government entity or business to a consumer. As mentioned at the beginning of the article, automatic direct deposits can simplify the process of fund transfer, and a few of such examples are:
· Paychecks
· Government benefits
· Tax refunds
· Annuity payments
· Interest payments
ACH V/S Wire V/S Check Transfer
The three usual financial transaction methods are automated clearing house transfers, wire transfers, and checks.
Both ACH and wire transfers are electronic fund transfers. ACH and wire transfers are secure means of money transfer, and banks keep a record of transactions too. ACH transfers typically take one business day, and wire transfer is generally completed within a day. However, ACH transfers are often free or have a minimal fee. A wire transfer typically costs $10 or more to send money.
Checks, unlike ACH and wire transfer, are not electronic fund transfers. Checks need to be physically printed and sent to the recipient. Check fund transfers are the slowest of the three methods. Writing a check might be the cheapest financial method, but considering the transportation, hassle, and labor, this method would be costlier than the other two.
Conclusion – ACH would be the best among the three, considering the cost and ease of fund transfer.
Benefits of ACH payments
Let us explore the advantages of ACH payments. Minimal fee for the transaction, Security of funds, convenience of fund transfer, and ease of management of funds and transaction history are the benefits of automated clearing house network payments.
Low cost
Who doesn't like to use the cheapest mode of a transaction? An ACH payment transaction costs significantly less compared to credit card payment or wire transfer, usually less than a dollar. Paper checks have the lowest transaction cost, but they cost the merchants more time and labor. The merchants prefer ACH fund transfer over any other transaction method with the lowest transaction price. ACH fund transfer charges also decline as the number of transactions increases.
Security
Secure means are always necessary. ACH payments are secure. Unlike a check, it does not pass through person to person. Hence your credentials are not exposed. Clearing houses also enforce rules and regulations for ACH transfers and keep the account details confidential. Banks reverse most of the charges in case of fraudulent activity.
Convenience
ACH payment is convenient for both the payee and the payer. You can customize your bank account or link your account with secure apps like online check writer to make a one-time payment or schedule your recurring bill. Choosing the online option saves you trips to the bank and the inconvenience of writing a check.
Ease of management
Managing your finance is now easier with tracking fund transfers, payment history, and accounting. Secured and unique login IDs and passwords give you quick access to your online account regardless of banking hours.
Cloud banking has made ACH payments easier with no account fees, no cap, no minimum balance requirement. Sign in to online check writer, one of the best online apps to make hassle-free ACH payments.
Knowingly or unknowingly, we are enjoying the benefits of ACH payment. From businesses to individuals to organizations, fund transfer is made easy. It is time you consider an automated clearing house payment method if you still rely on other means of fund transfers.
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