What Is an ACH Payment? ACH Payments & Transactions for Small Businesses

What Is an ACH Payment? ACH Payments & Transactions for Small Businesses

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Posted by Kindra K.

September 30, 2021

What Does ACH Stand for in Banking?

As a small business owner, a reliable payment system is critical for accurately and efficiently processing customer payments. And from a customer standpoint, it makes a big difference when there’s a convenient, professional system to pay for products or services rendered. That’s where ACH payments come in. 

ACH (Automated Clearing House) payments, also known as direct transfers, allow customers to transfer funds directly to you from their bank account. At just 1%, the processing fee for ACH payments is lower than that of a credit card payment and more secure than a paper check. Plus, you’ll get your money as soon as the next business day. For details

click here

. This is


true if most of your customers choose to pay via credit card because, on the business end, you’re paying a percentage of the total payment in addition to a fee per transaction. Talk about a loss of profit!

77 Percent-Inline

Keep reading for an overview of ACH and how it can be a boon for your service business. Or, jump to the relevant section below that directly answers your question.

What Does ACH Stand for in Banking?


stands for

Automatic Clearing House (ACH)

network. It’s an electronic payment system run by the

National Automated Clearing House Association (NACHA)

which moves money and information from banks through Direct Deposit and Direct Payment ACH transactions which include:

  • ACH credit

  • ACH debit

  • Both recurring and one-time payments 

  • Government payments

  • Consumer-to-business transactions

  • Person-to-person transactions (such as Venmo)

  • Business-to-business transactions

  • International payments

In Some States
  • $41 trillion moved per year via electronic financial transactions

  • $24 billion electronic transactions processed per year

It’s considered one of the

safest and most dependable payment systems

globally and has been around for over 40 years. Originally, it was conceived as an alternative to paper checks in the 1970s and now thrives as the most dominant electronic payment system. In fact, it’s responsible for

90% of electronic payments

—and it might be high time for you to get behind it, too.

How does ACH work? 

An “originator”—which can be a bank, government department, person, agency, or company—begins a direct deposit or direct payment through the ACH network. The originator’s financial institution, formally called the

originating depository financial institution (ODFI)

, groups the transaction with other ACH payments or deposits, which are then sent out at a given interval.

What’s the Difference between ACH and Wire Transfers?

As a business owner, you’ve probably come across wire transfers. If you’re curious about the

difference between wire transfers and ACH payments

, take a look at our comparison below: 

Transfer Speed 

  • ACH payments typically take 1-2 business days to complete. Some ACH payments are subject to review, which may prolong their processing time to up to 5 business days.

    Learn more


Wire transfers: 
  • Usually within one business day

  • Proceeds typically available the next day after or, sometimes, same-day

  • The process is automated but depending on the bank, a bank employee sometimes needs to review wire transfers before placing funds into a particular account 

  • International wire transfers can take an extra business day or two


While both ACH and wire transfers are relatively safe, getting a wire transfer returned after it’s been sent out is incredibly difficult. With ACH, on the other hand, is much easier to reverse payments. For example, if you were to accidentally overpay an employee, you would be able to remove the money from the account. 


There’s a reason why you hear about wire transfer scams so often; con artists like that “Nigerian prince” or “long-lost cousin” who sent you a fake email try to take advantage of the relative ease of wire transfers.

Millions are scammed

out of money each year. 

It’s important to remember that with


forms of payment, you’re using sensitive information such as your bank account numbers, your routing number, and other data you don’t want to get in the wrong hands so make sure you trust the recipient. 


  • Money is transferred to or from your account or directly to or from the other accountholder 

Wire transfers:

  • Sending money:

    Funds have to be available before the bank processes the transfer; as the financial institution processes the transfer request, the money is immediately removed

  • Receiving money:

    The individual receiving the proceeds can immediately withdraw the funds as soon as the payment is credited to the account

Wire transfers are typically only used for large money amounts like making a down payment on a house. A wire transfer guarantees to a seller that you can actually make good on your intent to pay. ACH payments, on the other hand, are better for smaller but more common payments like direct deposit paychecks, automatic billing, and 401k contributions.

What’s the Difference between ACH and Credit Card Payments?

The main difference between

transferring money over the ACH network versus using credit card payments

is the real-time guaranteed funds. With credit card companies like Visa, for example, the company verifies if somebody is within their credit limit and after the network approves the transaction, that money is then guaranteed to the company or merchant.

An ACH transaction is a request for funds that are batched together with other ACH transactions and sent out to be processed. The main benefit of ACH is that it’s lower cost compared to credit card processing fees.

Benefits of ACH Payment Processing

As mentioned before, the

way the ACH network works

is that it groups together financial transactions typically three times throughout the day. On the user end, this means online transactions are quick and easy. Average ACH debit transactions settle within one business day on average and ACH credit payments process within a couple of business days in most cases. Recent changes to NACHA’s operating rules now allow for same-day ACH transactions. 

How ACH Payments Help Businesses

There are several

business-specific benefits of ACH payments

. They’re secure, relatively cheap, and facilitate the process of recurring payments. Using ACH payments is one of the best

money management tips for service businesses

you can use for your own company. Let’s dive into the details of how they can specifically help your business below.

  • Secure, easy to handle

    : If a customer pays with a check, there are a couple of possible hiccups that could happen along the way. Businesses must wait for payment in the mail and then take an additional step to deposit the check at a financial institution. In between all of those steps, payments can get lost, and then you usually have to manually enter the information from the checks into your bookkeeping accounts. Electronic payments via the ACH network arrive reliably and quickly. It also saves you the hassle of an extra errand to the bank and you won’t have to deal with a check bouncing. 

  • Cheaper alternative:

    As mentioned before, if you accept payment for your services or product with a credit card, there are usually fees associated with that transaction. It costs significantly less to settle an ACH transfer than it does to deal with plastic. With recurring payments, in particular, those savings—even only a few cents on the dollar—really do make a difference… especially when you’re processing hundreds, if not thousands, of credit card transactions. ACH does not give you a real-time authorization response however, which is one drawback you may want to consider when you’re deciding what payment options to accept.

  • Remote payments:

    Although this is true for using a credit card as well, businesses can accept remote ACH payments. This is a particularly handy solution for avoiding issues with customers who don’t want to send out their credit card information.

How ACH Payments Help Customers

On the other side of the spectrum, customers also benefit from ACH payments. If you’ve ever forgotten to pay a bill or forgotten to pay a recurring fee, then you know that there’s nothing more annoying than receiving a late fee. When you automate the process by using ACH payments, you don’t have to think twice about regularly paying for your bills.

  • Simple payment system:

    You don’t have to write a check, reorder checks, or worry about when they’ll run out. Customers paying by ACH also don’t have to worry about getting checks on time in the mail or risk being late on their bills. Plus, they won’t be charged on their credit card and have to pay it later; the funds simply come out of their account.

  • Recurring payments:

    This is one of the main benefits. ACH payments allow customers to automate the bill-paying process. It’s time to say goodbye to alarms and written reminders—the money is conveniently withdrawn straight from an account without any dates or times to remember.

Personal ACH Payments

There are plenty of ways to make personal ACH payments with either a business or an organization. Typically, you cannot do direct person-to-person ACH payments without some sort of

intermediary party

in the process. 

  • Third-party apps:

    You can transfer money to loved ones or friends without any extra charges with a variety of apps. Using the ACH network and the app or service, you can make deposits and withdrawals from your bank account.  Here are some common third-party apps you might use or might have used in the past:

    • PayPal

      • This is one of the oldest and most popular payment services. Transfers are free when they come from your own bank account or PayPal balance. However, outside of those two instances, there are fees associated with processing PayPal transactions. If you’ve ever won an auction on eBay, you’ve definitely encountered PayPal. It’s also sometimes used for payment of independent contractors. 

    • Venmo

      • This handy app is owned by PayPal. It’s free to use and pulls funds from either your bank account or debit/credit card. You can conveniently leave messages on payments to describe what the payment is for or request payment for bills, food, etc. It’s a favorite app among Millennials but has some limitations like a 3% fee for using a credit card and a $2,999 transfer limit.

    • GooglePay

      • Integrated with Gmail, you can send money to any email address for free or request payment. Recipients don’t need a Gmail account but they will need to enter their bank account information to receive and accept money.

  • Bank offerings:

    Your bank or credit union may have a person-person (P2P) payment service that allows you to send money.




    are examples of P2P payment your bank may offer.

Types of ACH Transactions

ACH Credit

How it works:

Payer starts the payment through their financial institution and electronically transmits the payment through the ACH network to the recipient’s bank account. You can both

receive money or make payments with ACH credit


Alternatively, an ACH deposit allows a customer to

deposit funds directly into your business bank account


When you choose to have your IRS or state tax refund directly deposited into your bank account, this is also an example of an ACH credit. 

You can also be on the other end and make payments by ACH credit. Business owners, for example, can use an ACH credit to pay state taxes. You simply need to authorize your financial institution to transfer a specified payment amount from your bank account to the state government.


Examples of ACH credit:

Direct deposits for any government benefits, tax refunds, or earnings you receive and, for some, tax payments you might make.

ACH Debit

This debit occurs when you authorize a department, agency, or company to take money straight from your account, typically on a recurring schedule. In this case, your bank doesn’t start the transfer process. Instead, you’ll sign up with the company or agency you are paying for services or products. 

Examples of ACH debits:

Utility payments, credit card payments, and other common bills like health insurance, mortgage payments, or subscription services.

To authorize an ACH debit, the company you’re paying will need access to your account number and receive permission to take money out of your account on the previously agreed upon schedule. California and Michigan are two states that allow an ACH debit option for business owners to pay their taxes.

ACH Deposit

An ACH deposit is an electronic transfer of money that occurs between different financial institutions.

How Do You Accept ACH Payments

Curious how you can use ACH payments to benefit your own business? Housecall Pro offers several ways customers can choose to pay you that are quick and easy for both you and your client.

In order to accept ACH payments, you will need a bank or a separate ACH processor. If you want to save money, choose a processor that charges a flat fee for ACH instead of a percentage-based fee. Your best answer to settle ACH payments and other options? Housecall Pro.

Housecall Pro Features

You can think of Housecall Pro as your small business dashboard that’s capable of processing ACH payments and much, much more. It has features that can assist you before a job, during a job, and after a job.  Need to pay contractors?

Contractor payments by Housecall Pro

are simple and easy. Does a customer need to change their appointment? This software lets you easily update jobs on-the-go. There are plenty of additional features you can use to streamline your workflow.

Before the job: 

  • Scheduling made simple:

    Create and edit your schedule right from your mobile device or PC. Keep all of your employees updated with notifications related to their jobs sent directly to their phones. 

  • Online booking:

    An easy, online booking system encourages potential customers to choose you over the competition. Now they can schedule an appointment or service job 24/7 online so you can book jobs while you sleep.

In the field: 

  • Dispatch your technicians:

    Set up recurring jobs, assign teams, and schedule out arrival windows so customers stay informed. Changes made to any jobs will change and update in real-time across everyone’s device so all of your team members are always on the same page.

  • On-my-way notification texts:

    Create a consistent, reliable communication base with customers.

  • Live Map GPS:

    See where your employees are at all times and schedule the closest tech to go out to a job. This helps save time and creates an overall more efficient business model.

  • Custom text and email:

    Keep your customers in the know during the job to build trust and create repeat customers. If an unexpected issue comes up, it’s simple send out a custom message with an updated invoice.

After the job: 

  • Invoicing:

    Invoice and send estimates automatically. Just one click and you can collect payments from customers in a timely manner. Bookkeeping has never been easier.

  • Follow-up:

    Provide the ultimate customer service experience from start to finish. When you’re done with a job, create an incentive for the customer to come back with automated email marketing and postcard marketing. 

Housecall Pro Payment Options

Convenient payment options aren’t just helpful for your customers so they can pay for your services in a timely manner, it’s also helpful as a business owner because you don’t have to use several different apps to send invoices and receive payments. 

Credit Card Processing

If your customer doesn’t want to use ACH, he or she has the option to still pay by credit card. Built right into the Housecall Pro app, our credit card processor, Stripe, delivers the streamlined solution for accepting credit card payments at the end of a job without having to reconcile your transactions. 

Invoicing/Pay online

Text or email your invoices with Housecall Pro and your customers can pay directly online. This helps to diminish the number of payments you’re chasing down.

Mobile Processor

If you’re ever had to rely on an outside POS system, you may be familiar with some of their drawbacks. Sometimes, server networks go down and you’re unable to process any credit card transactions—which then becomes an absolute nightmare if you’re trying to collect payments. Avoid relying on unstable platforms. For our payment input system, you simply scan the card and the app fills in the rest. Just use your phone or tablet. 


  • 2.9% plus 30 cents per credit card transactions

Processing Time:

  • 2 business days


Instapay lets you

deposit credit card payments into your bank account instantly

. When Instapay is enabled, you can access your money in thirty minutes or less, which gives you flexibility with your cash flow and provides peace-of-mind instead of waiting and checking constantly to see when a payment comes through. 

We get it, sometimes you just can’t wait two days for your money to come through, especially if you’re working with narrow margins. Payroll, emergency expenses, or maybe you just want to treat yourself over the weekend, it’s crucial to have money when you need it. 


  • Credit card processing fees plus 10% per transactions

Processing Time:

  • 30 minutes


ACH payments give your customers the option to pay straight from their bank account without the hassle of paper checks, credit cards, wire transfers, checks, or cash. They’re electronic, meaning they’re faster and much more reliable than checks. Because the payment doesn’t need to go to a credit card processor, it costs less than a credit card payment. Saving you from affecting your bottom line.


  • 1.0% per transaction

Processing Time

  • 1-5 business days

ACH and other options for payments to enhance your business

Easy payments for services can help streamline your business and add an extra layer of professionalism to your company. These days, customers expect quick and efficient payment processes. With ACH payments, you’ll have peace of mind while delivering the best possible experience for your clients. With Housecall Pro’s services and options for payments, you can please everybody, from those who want to pay a traditional way with a check to those who want more modern, convenient options.

Housecall Pro

is rated the #1 software to run your HVAC, Plumbing, Electrical, Carpet Cleaning and other home service businesses. Our features allow you to schedule and dispatch jobs, get booked online, send invoice and receive payment within minutes whether if you are in the office or out in the field. Join all the other successful home service businesses who have already started and

try Housecall Pro for 14 days free today


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