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Getting Started with ACH
Did your boss ask you to find out about electronic payments—and
now you are searching the Internet—not even sure what questions
to ask?
ACH Universal™ will enable you to electronically:
• Pay Direct Deposit to your employees
• Collect from customers
• Pay vendors and governmental agencies
• Consolidate funds between accounts at different banks
Two-step process to getting up and running
1. Obtain ACH service from your bank
2. Create an ACH file - also referred to as a NACHA formatted file.
This is a standardized format that contains your transaction information.
We typically recommend calling vs. walking into your local branch.
By calling the number on your bank statement, you are more likely
to get a customer service representative familiar with business
services. The department responsible for ACH services is often called
business banking or treasury management services.
Underwriting
When the bank signs you up for ACH service, in essence they are
giving you a line of credit.
To protect themselves and minimize fraud costs and losses for all
of their clients - banks will walk you through an underwriting process.
This will enable them to provide you with a limit as to how much
you can have in the ACH network at any given time.
Your best bet for underwriting is always with your current bank.
Your account history with the bank, offsetting balances and your
credit history all come into play during the underwriting process.
Obtain a list of sample transactions from your internal accounting,
payroll or other system.
Use our free trial software to convert your list of transactions
into an ACH file. Then, send the ACH file to your bank for approval.
An ACH file is a standard file format - specified by NACHA - the
National Automated Clearing House Association.
Once your file is approved, you are ready to pay employees and vendors,
and collect from customers.
To create transactions, simply enter them into ACH Universal, create
the ACH file, and then transmit it to your bank. All of this can
be automated with our Automation
features.
What about ACH processors?
ACH processors play a role identical to those of banks, in that
they will accept your ACH transactions, and pass them through the
ACH network. However, as these processors typically do not have
the same advantages as your bank in minimizing fraud risk - such
as account history and offsetting balances - the fees on ACH processors
can be significantly higher.
ACH service through banks averages 12 cents per transaction, while
service through a processor will typically be higher.
What costs can I expect?
Bank ACH service is fairly competitive and averages a flat 12 cents
per transaction.
Processor ACH service costs vary significantly and are typically
30 - 40 cents per transaction. Costs may be on a sliding scale and
can be significantly higher for low volume users.
In addition, many charge a monthly fee for the service - whether
used or not - and a per file fee.
Notes:
--There are no volume or transaction fees associated with ACH Universal.
--See pricing note below for additional information
When we start sending transactions, how do we know if they went
through?
Sending ACH transactions is exactly like depositing traditional
paper checks.
Now when you deposit checks received from customers, the bank will
issue you a credit for the total amount. Subsequently in the clearing
process, if a check fails to clear - ie. Insufficient Funds, the
check will be returned and a debit will be issued against your account
for the amount of the check.
The ACH process works in a similar manner.
Typically, the bank will credit/debit your account on the effective
date of the transaction. If the transaction is returned, for example
Insufficient Funds, your account will be debited/credited for the
transaction amount. The number of days it takes to return an item
varies, but it is typically within two - three business days.
What is the difference between an EFT, echeck and an ACH?
All three terms are very closely related - EFT's (Electronic Funds
Transfer) encompass ACH's plus other types of transactions, while
eChecks typically represent a subset of ACH's.
An Electronic Funds Transfer is a fairly general term and refers
to any computer-based system used to perform financial transactions
electronically. It would include bank wire transfers, debit card
activity, ATM initiated transactions - as well as ACH transactions.
An eCheck is an ACH transaction that involves electronically processing
a check - commonly referring to by the Standard Entry Class codes
of ARC, BOC, TEL, WEB, CCD and PPD. While not everyone includes
CCD and PPD classes, it is a philosophical difference.
If I switch banks or processors, can I still use ACH Universal?
Yes. ACH Universal creates a NACHA standard formatted file. Any
bank or processor that accepts ACH files will accept ACH Universal
files.
Need additional information or help getting started?
Please call us at 866 226-5732.
Pricing notes:
Pricing is based upon our conversations with providers of bank and
processor ACH services. Pricing can even vary within a financial
institution based on factors including relationship history, risk,
industry and volume.
Sliding scale pricing for processors are processor specific. Example
- Intuit charges 99 cents per transaction, but this decreases based
on volume (http://payroll.intuit.com/payroll_services/direct_deposit/index.jsp).
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