ACH VS. Checks – Which Is Right For Your Business?

Jan 11, 2022

ACH payments and checks are some of the most widely used payment methods. The use of checks is one of the most convenient ways to collect large sums of funds from clients and customers. 

ACH payments are another convenient way to accept funds for large purchases as well. So what is the difference between ACH and check payments? Read on to find out more. 

What Is A Check?

A paper check is a payment method that draws funds directly from a checking account. The writer of the check is known as the “payer”. They write the name of the “payee” on the “pay to the order of” line on the check and sign it on the signature line. 

Once the check is written, dated, and signed it authorizes the bank to pay a specific amount of money to the “bearer”. The bank is known as the “drawee” from which the check is drawn. 

Checks can be both cashed and deposited. When the payee gives the check to the bank to negotiate, the money is withdrawn from the payor’s bank account. It basically gives the instruction to the bank to move funds from the payor’s account to the payee or payee’s account. 

What Is ACH?

ACH, also known as the Automated Clearing House, is a network that enables the transfer of money from one bank to another such as from a customer’s checking account into the business checking account at your merchant bank. 

In order to make an ACH payment, the payer offers a bank account number and routing number of their bank and the bank account number and routing number of the payee. All ACH payments are carried out in batches within specific timelines throughout the business day. 

Which Is The Best For Your Business?

In order to determine the best form of payment for your business, in this case ACH vs Checks, it is important to look at some of the downfalls that checks present.

Although you can easily take a check to the bank to cash it, the amount that you can actually withdraw can come with a limit. Checks are also more susceptible to fraud. If the check were to be stolen and cashed, being able to recover that loss of funds will require some form of legal action. Even then, your funds may not be fully recovered.

With ACH, all sensitive information such as accounting and routing numbers is given once, only to be safely encrypted and stored. This makes ACH a very beneficial payment option for recurring bill payments such as for payroll, rent, mortgage, and utility bills. 

Another advantage for ACH payments is that it does not require physical handling. This significantly reduces the processing times and reduces errors. Less processing times means businesses can process more payments. 

Moreover, ACH payments are completely digital, which means funds are taken directly from the issuing payer (ACH debit). Then they are retained by the automated clearing house network for batch processing which is then deposited into the recipient’s bank account as an ACH credit. 

Finally, being able to track payments is critical in order to complete audits and correct any errors for accounting purposes. When it comes to ACH payments, all this important information is tracked in real time. The paper trail includes: physician location, party identifying information, and timestamps. No manual data entry is required. 

Closing Thoughts

The most important characteristics that businesses should look for in a payment method is that they are both secure and efficient. ACH payments provide a payment method that is faster, safer, and more cost effective that satisfies both suppliers and buyers alike. 

By understanding the differences between checks and ACH payments, you are positioning yourself to make the best, most strategic choice for your business.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.