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How Does ACH Service Work?
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How Does ACH Service Work?

As the e-commerce industry continues gaining sheer momentum and popularity, businesses all over the world are just beginning to realize the benefits and perks it can bring to financial management. Enhancing speed and customer service are perhaps the two main factors that can give any business a unique edge in the industry, and that is where the ACH service steps in.

Bid a permanent farewell to waiting in lines to make payments in your bank or get checks processed to recover funds. ACH service digitalizes your business in no time and lets you enjoy optimum speed, connectivity and affordability in a single go.

So what exactly is ACH service? How does it work? And what kind of businesses can use and benefit the most from this service? Keep reading to find out!

Introduction to ACH Service

Automated Clearing House or ACH payment processing is a digital method of financial transaction that automatically debits the required amount from the customer’s account and transfers it to the vendor’s account. It supports automated payments, thus ACH service is ideal for managing large volume of payments like payroll etc.

There are multiple uses of ACH service, and a variety of business merchandisers can take advantage of this fast and easy method of payment processing. Some of the main areas where ACH payment processing is used include:

• E-commerce payments

• Payments between two businesses

• Payments between a business and the government (tax etc)

• Direct payment from a consumer like utility bills, mortgage installments etc,

• Direct payment to a consumer like payroll, refunds etc.

How Does It Work?

ACH service is a step by step transaction method that makes transaction fast and speedy without compromising on the security of either the debtor or the creditor. Also, the ACH service works on a transaction-wise basis and the process is carried out through the following set of steps:

1. The first step is when the receiver acknowledges for an ACH debit on their account. Once authorized, the receiver grants permission for the ACH service to access the account and make or receive the payments. The receiver in this case is the consumer requesting for a service or transaction from a vendor.

2. The originator of the service is the vendor or merchandiser requesting the funds from the consumer. They have to provide a written or electronic acknowledgement of the ACH service to get activated.

3. Once authorized, the originator can receive the required set of payment from the receiver without any additional hassle on the part of both the vendor and the consumer!

Though it may sound to be long and complicated, the actual process does not take longer than a traditional credit card transaction. That being said, not only can you take advantage of the limited time consumed through ACH service, but also save on the transaction fees that is normally associated with using a credit card. Thus, ACH service proves to be convenient and cost effective for both the vendor supplying the service and the consumer availing the service.


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