In last week’s blog, we walked you through the basics of EFT (Electronic Funds Transfer) as an incredibly popular method of transferring money in Canada. EFT is an electronic exchange transfer of money from one bank account to another- which debits a user’s checking account. You can read the full blog here: ,https://www.apaylo.com/post/what-you-need-to-know-about-eft-electronic-funds-transfer-in-canada
This week we will discuss ACH- another very popular method of processing financial transactions for both individuals and businesses in the United States. ACH stands for, Automated Clearing House, and is defined as a network that coordinates electronic payments and automated transfers of money. Also known as Direct Deposit, ACH is a method to transfer funds between banks without the use of cheques, credit cards, cash, or even wire transfers.
The Automated Clearing House system is comprised of computers working together to automatically process payments- without the need for manual payment processing- on your part or on the part of the biller. To executive a financial transaction, the network runs payment requests through two centralized clearing houses- allowing for expedient and efficient matching between many different financial institutions. In fact, ACH is considered a, batch processing system– which handles millions of payments at the end of each and every day!
ACH is an extremely popular and efficient method used in everyday financial transactions for both businesses and individuals. Examples of ACH transactions can include:
a) Business payments to their suppliers and vendors
b) Automatic payment of regularly recurring bills- including utilities, insurance, and different services. Providing your biller with a void cheque allows them to set up ACH billing with you- making for a much more convenient and hassle-free process!
c) Getting paid from your employer via direct deposit to your bank account
There are numerous advantages to utilizing ACH to process payments, which includes:
a) Receive funds in a faster time frame than it takes for most cheques to clear
b) Automating bill payments ensures you never miss a payment; especially for someone who deals with a large volume of monthly transactions and has problems keeping track of them all
c) Make online purchases without having to use credit cards or any other methods of payment
d) Lowers the cost of transferring funds-as fees are much lower than standard bank wires- plus no labour costs involved (versus sending an employee to the bank to cash a cheque)
e) Pay employees, vendors, and other billers directly and instantly- without having to go through the time and expense of signing individual cheques, stuffing envelopes, paying for postage, etc.
f) The electronic process makes the facilitation of payments between parties faster and easier while minimizing errors and keeping electronic records of each transaction- something that is very convenient for business owners who are pressed for time!
For more information on the Automated Clearing House system, please check out https://www.investopedia.com/terms/a/ach.asp
Like EFT processing, ACH is also offered as part of Apaylo’s exclusive suite of business products- contact us and ask how you can get started processing ACH payments for your business! https://www.apaylo.com/products
