High-Risk ACH Processing

Receiving payments from customers was once simple. The digital era, however, has made receiving payments more complicated yet also more efficient and effective, especially for holders of high-risk merchant accounts. Consider, for example, the transition from traditional checks — previously mailed to a vendor to complete a purchase — to electronic checks. With electronic checks, payments transfer instantly over the internet and receive verification and processing shortly after receipt.

Electronic check processing, typically called ACH or Automated Clearing House, is one term you might encounter in discussions involving payment processing although you’ll sometimes see the term EFT, for electronic funds transfers, used instead. Businesses in high-risk industries should pay particular attention to the value offered by ACH processing.

Advantages you’ll receive by accepting electronic funds transfers:

• Boosting sales –
  Many customers, especially those who invest in certain high-risk industries, might not have a credit or debit card readily available. While most people in the United States have at least one credit or debit card, an even greater percentage of the population has access to a bank account. This situation is doubly true for consumers in older demographics or those in low-income brackets. Since ACH processing requires a routing and account number, your customers can quickly make a purchase using this method.
• Gaining a competitive edge –
  Many customers either prefer or have easier access to payment directly from their bank accounts. Accepting ACH processing will give you an advantage over other firms in your industry that have more limited payment options. Plus, in an era when eco-conscious decisions are important to many customers, the paperless nature of ACH payments can serve as a selling point to any of your environmentally conscious customers.
• Lowering fees for ACH processing –
  Since ACH fees are a fixed amount per transaction instead of a percentage fee, electronic checks are equally useful for merchants who set up recurring payments or who sell high-dollar items. Since those in high-risk industries typically have to pay a higher fee for payment processing overall, this lowered cost can help offset your other payment-related expenses.

The world of ACH processing also comes with equally many electronic resources. Tools such as automatic invoices, emailed receipts, and similar resources can help decrease your workload and increase the level of communication with the customer. In addition to helping make sure to deliver payments promptly, this automated communication can help build your relationship with your buyers and ensure that they stay loyal to your company.

Electronic checks also process quickly. While the industry standard for high-risk payment processing is four days from the date of the transaction to the time of the deposit, electronic funds transfer processed by High Risk Pay will typically reach your account in 24–48 hours. In addition to providing extra flexibility with the use of your resources, this expedited processing window ensures that any issues — such as insufficient funds on the customer’s end — are recognized early.

Consider some further points about ACH processing:

• Prioritizing ACH payments –
  Banks tend to prioritize ACH payments over other withdrawals from accounts. Since the electronic funds transfer enters the bank’s system early, the funds get placed on hold and are no longer available for other transaction types. Even if a customer overspends, you are more likely to receive your funds than you would be if you had used standard checks or a debit card transaction.
• Narrowing chargeback disputes –
  Chargebacks are a persistent concern for businesses in high-risk industries, but ACH has some benefits. While disputing credit card transactions can happen for many reasons, a far narrower set of legitimate causes exists to contest an electronic funds transfer. Specifically, customers can start a chargeback only if the transaction was processed before the authorized date, if the dollar amount of the transaction was not authorized, or if the transaction itself was never authorized.
• Reducing card transaction dispute time frames –
  While customers can dispute card transactions for up to 180 days, ACH transactions can be disputed only within 60 days. Disputing a card transaction is far simpler and faster than disputing an ACH payment, with a card chargeback requiring only a phone call. An ACH chargeback, however, requires speaking to a bank representative in person and completing more documentation. This arrangement can discourage customers from initiating a chargeback unless they have cause to do so.
• Increasing fraud protection –
  When compared with traditional check payments, electronic checks also benefit from increased fraud protections. High Risk Pay implements some preventive measures that detect likely fraud and automatically decline transactions. As a result, you will face fewer hassles and bank fees.

Beyond offering fraud protection, electronic checks also have some security features that traditional checks lack. All the information transmitted goes through secure channels and gets encrypted. In most cases, the complete bank information will never be seen by a representative from the company receiving the payment. Since traditional checks display all the account information on the bottom of each check, and since these checks will pass among several people before arriving at the bank, ACH payments are a more secure option.

Last, some companies that have a checkered history might be rejected for credit card processing but accepted for ACH payment processing. As a result, this method of payment can serve as a go-to resource for companies rebuilding their credit, reputation, and track record.

Setting up an ACH capability is easy once you have a high-risk merchant account. To get one of these accounts set up, you need only a few items: a U.S. business license, current bank statements, any statements from previous merchant accounts associated with your company, a government-issued photo ID, and a business checking account. Approval takes only 24–48 hours to complete, and setup is quick and easy.

If you’re in a high-risk industry and have or are looking into getting a high-risk merchant account, accepting ACH payments can help your company thrive by increasing your security, preventing fraud, bolstering sales, and reducing fees.