An ACH API is able to offer the opportunity for developers and “software as a service” (SAAS) platforms to debit and credit bank accounts by making use of the ACH network by using an Application Program Interface, more commonly known as an API. This enables the automatic ACH payment collection, disbursement and reconciliation.
If you have an application that makes use of a recurring or subscription payment-based setup, making use of an effective ACH Payment Gateway API is a real game changer and will ensure a seamless user experience for platform users.
What are the Benefits of an ACH API?
You might be trying to get your head around how ACH APIs will benefit your business. If you have some knowledge of credit cards, ACH transactions are completed differently to credit cards.
Credit cards make use of an authorization component that tells the biller immediately that their payment has gone through. The ACH doesn’t do this, as it operates in what is known as a “batch environment”, according to https://www.zoho.com/subscriptions/blog/5-reasons-why-businesses-should-use-ach-transfer.html. This means that it can take upwards of 1 to 3 days before an issue or problem with a payment can become known. This form of payment may be most suitable to bigger organisations who need to process a monthly payment for each of their customers over a similar timeframe. But, it wouldn’t be as attractive for a business who may need immediate confirmation of payment in order to ship a product to their customer.
There are also differences in terms of cost between the two methods described above. For credit cards, it can cost around two or three percent of a transaction amount to successfully process the payment. This is in contrast to an ACH payment, which usually charges somewhere between 25 and 50 cents per transaction. Of course, these costs can add up.
A good advantage of an ACH payment over a credit card payment is that there are much higher decline rates with credit cards, according to TheBalance. This is not as big an issue for ACH payments, especially when you are needing recurring billing. This makes ACH payments an attractive option.
Another advantage of an ACH payment over a credit card is that not every customer will have a credit card. Also, for those customers that do have a credit card that they can process a payment with, it provides another method for sending payment in case for whatever reason that payment can’t be taken from a credit card, or if the card has expired or has been stolen. If you have two payment methods, it will save time in trying to track down missed payments.