Learn about the key differences between the ACH network and Card Network payments, and why it matters for your business, in this quick 2 minute video and blog post.
In this video, you will learn about the key differences between the ACH and the card network payments.
The ACH system in the US … it doesn’t have a concept of authorization. What does that mean? Think about it like this: on the card networks one can authorize a card for say $50 before you pump your gas. Then once you’ve finished pumping, the point of sale system will capture the actual amount of your gas. In payments parlance is known as auth, with delayed capture. The authorization in this case, performs the duty of checking to see if the amount is available on the card.
The ACH network does not have this feature. Instead, one is always taking money from one account and putting it in another. Simple, right, either taking or making payments. That’s really it.
Another key difference is the ACH network, is that it’s high latency. By that I mean that you don’t often know right away if your payment actually went through. The system takes hours, sometimes days to let you know when there was an issue with a payment.
This high latency also means that the ACH network updates asynchronously. Meaning that you get the final confirmation sometime later, not during the initial request. To lessen the business impact, you will need a smart payment collection system, like chargent and diligence in your process, these 2 things will enable you to manage the non-sufficient-funds and other issues that will occur.
Now The reason I think you should consider using ACH even with these issues is the dramatic cost savings. If your card transaction fees are keeping you up at night, then you should be working on a plan to take more ACH payment.
Need help with that strategy? I’d be happy to work with you on it. Our only mission here at Chargent is helping you make payments easy.
Reach out to us today. At Chargent. We are always here to help!