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Published: March 25, 2019

Is ACH better than accepting credit cards?

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Electronic payments today have made it a lot easier for businesses to transfer funds making goods, especially those sold online, a lot more accessible for interested customers. Two of the most popular methods of transferring funds electronically are automated clearing house (ACH) and credit cards.

Both these merchant services allow businesses to collect payments from their customers but each has obvious advantages and disadvantages. Understanding how credit card payments differ from ACH can not only allow you to find better ways of connecting with more customers but it is vital if you are to choose the best method to allow your business to run more efficiently.

How exactly does credit card processing work?

Credit card payments are accepted virtually everywhere but they have become especially useful for those that operate and use e-commerce stores for shopping. Credit cards offer shoppers a way to make purchases on credit so that payment can be put off to a later date. Businesses often prefer credit cards because they often guarantee payment as other types of payment that draw funds from bank accounts (debit cards and personal checks) can be affected by insufficient funds or routing errors.

How does ACH processing work?

ACH transfers, on the other hand, is also a safe and common method for receiving payments. However, unlike credit card payments, ACH payments must be accompanied by bank account, as well as the proper routing information so that the transfer of funds can be initiated.

So, which is better- ACH or credit card payments?

As stated earlier, both of these methods are excellent options for merchants today. However, the primary difference between the two are the costs involved.

If your business is looking for simplicity then credit cards are the way to go. Credit card payments are also faster than ACH payments. On the other hand, credit card processing fees usually more expensive for the merchant.

ACH payments do take longer to process. But they are cheaper compared to credit card payments. Though ACH is one of the safest methods of accepting payment, it can also lead to some issues. For instance, if a merchant receives an ACH payment from a client, but the client does not have sufficient funds in his or her account, the merchant would not find out that the funds are unavailable for several days. In the meantime, the product has been delivered or the project has begun.

Both payments have pros and cons. Therefore, your decision between the two payments should be based solely on the needs of your business. If you cannot decide, we at Agapay recommend that you offer both payments options to increase your chances of serving more customers.

Want to have a discussion on which is better for your business? Call Agapay today!

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Agapay is a Registered Partner/ISO of Elavon, Inc. Georgia [a wholly owned subsidiary of U.S. Bancorp, Minneapolis, MN]
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