What are ACH and Debit Card Payments and what sort of advantages do they have?

Advantages of Debit Card Payments

The Direct Debit system is very simple to understand. Basically, our European clients can sign up for the Direct Debit service for debit card payments. This allows us to directly deduct from their bank account the minimum amount that the client has to pay his/her credit card company every month. This system is called debiting. The debit card payment system frees the client from the hassle of having to make the payment themselves, which would involve remembering the due date and making the payment on time. In this way, clients can save their own time and energy as well as avoid late payment fines.

Benefits of ACH Processing

ACH is a bit more complex. ACH stands for Automated Clearing House. ACH processing is an electronic payment system which, in this case, allows our clients to electronically debit and credit the checking and saving accounts of their customers, after these customers have granted permission.

For example, if we have a client such as an online pharmacy, and one of this pharmacy's customer wishes to pay the online pharmacy $100, then the ACH processing system will allow the pharmacy to deduct $100 from this customer's bank account after verification and only after the customer has given permission for this.

During ACH processing, usually this permission is taken when our client begins dealings with the customer. Similarly, if the pharmacy owes the customer $100, this money will be transferred electronically through the Federal Reserve Banking System to the customer's account. Hence no checks exchange hands.

This saves a lot of time, money and effort, since neither our clients nor their customers need to mail checks to each other (which would involve postage costs) and the payment processing and reporting is automated. This helps lower the risk of late payments and the resulting interest charges. Conventional invoicing is usually up to 80% more expensive than this automated system.

Apart from ACH Processing, our clients also save on:

• The clerical cost for account reconciliation
• Stop payment charges and check reissue costs. In fact, these costs are completely eliminated
• Administration and operating expenses
• Paper handling costs, called remittance processing costs, because checks are not used
• Bank service charges, which may be reduced

The transactions received during the day are not carried out on the spot. Instead, all the transactions received during the day are collected and stored, until a large number have accumulated. These are then sorted by destination and processed in batch.

This bulk processing saves both time, and since the process is electronic, paperwork. The ACH processing system is secure because it takes 2-3 days to receive information that confirms that all the transactions in the batch were valid and because, since no checks are used, there is no risk of them being lost or stolen. The money is only transferred; in the ACH processing system after this has been verified. Because of this, no guarantee is given that the payment will be made. In case of problems such insufficient funds in an account, the transaction is not carried out, and the funds are returned

One of the greatest advantages of the ACH processing system is that it offers multiple payment options.