Small Businesses Using Same Day ACH: Costs and Advantages

Apr 17, 2018

Are you running a small business and using ACH transactions? Computerized payments are beneficial both for merchants and consumers. What is ACH? What is Same Day ACH? Just read this article and you’ll know.

What You Should Know About ACH Payments

The paper check system that consumers have long used evolved into ACH transfers. ACH payments can be described as electronic payments made through the ACH (Automated Clearing House) Network. With the help of an intermediary, funds move from a bank account to a bank account. This intermediary is responsible for routing funds to the final destination.

There’re two basic types of ACH transactions. In one, money is pushed (ACH Credits). In the other, money is pulled (ACH Debits). Common uses of ACH payments are as follows:

  • Customers pay a service provider
  • Employers deposit funds to employees checking accounts
  • Consumers transfer funds from one bank to another
  • Businesses pay suppliers for products
  • Taxpayers send funds to the IRS or local organizations online

Sending and receiving funds with ACH creates several benefits for businesses. These include:

  • Ease of handling
  • Affordability
  • Long-distance payments

What You Should Know About Same Day ACH (SDA)Payments

It took payments more than a year to switch from ACH to SDA. SDA is called to help small businesses operate more efficiently. The first Phase of the implementation went into effect in September 2016. This phase is applicable only to credits, and only to transactions between US banks. Also, it applies only to transactions less than $25,000.

The second Phase implies initiating SDA debits. So, you can pull money from a customer’s account (if you have proper authorization) on the same day the transaction is initiated. ACH Debits can be for US banks only in this case as well and must be less than $25,000.

Now, the third Phase NACHA’s Same Day Automated Clearing House (ACH) implementation has taken effect. Phase 3 of this transition went into effect on March 16, 2018. It sets up a more streamlined funds availability timeline required by Receiving Depositary Financial Institutions (RDFIs). As a result, SDA credits are available for withdrawal by 5 p.m. RDFI’s local time.

If you’re interested in Same Day ACH, find a reputable credit card processing company to work with. Why not work with EMB is voted the #1 high risk payment processor in the US and carries an A+ rating with the BBB, as well as an A rating with Card Payment Options. You can secure SDA processing through EMB’s strategic partnerships.

Costs and Benefits of Same Day ACH Payment Transactions

First, let’s look at the costs. So, a fee is to be paid from the ODFI to the RDFI for each SDA transaction. Based on the estimated costs and SDA volume quantified in research during the development of the Rule, the Same Day Entry Fee will account for 5.2 cents per transaction. Through monthly billing, the ACH Operators will collect and disburse Same Day Entry Fees for ODFIs and RDFIs.

SDA has numerous use cases that can be beneficial to consumers, businesses, government entities and FI’s using the ACH network. Substantial cases are as follows:

  • Same-Day Payroll
  • Business to Business (B2B) Payments
  • Expedited Bill Payments
  • Account to Account Transfers

Small businesses, in particular, can enjoy the following advantages:

  • SDA for debits enables to get paid more quickly.
  • Traditional ACH allows funds to be withdrawn from your account up to 3 business days before being deposited into the recipient’s account. SDA allows keeping your money longer.
  • With SDA, you can avoid late fees in case you forget to make a payment.
  • SDA allows processing emergency payroll.
  • SDA can even allow processing payroll for hourly workers without the need to guess at hours worked.

The third and final phase of the faster payments launch is completed. It requires banks and credit unions to make Same Day ACH funds available to depositors by 5 p.m. in local time. Turn to a respectable processor to enjoy SDA payments benefits for your small 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.

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