ACH Transaction fees and the Hidden Costs of Check Processing

The terms “E-check, “EFT”, and “ACH” are frequently used together. They might seem interchangeable at times due to the overlap, but they are not the same thing.

Electronic Fund Transfer is abbreviated as EFT, which includes electronic interbank transfer.

EFTs includes both ACH payments and e-checks. Wire transfers and other transactions are also included in EFTs.

Table of Contents

  • About ACH fees
  • Flat Fees, Percentages, and Costs for ACH Payments
  • ACH payments for Small business
  • Paper Checks 
  • Paper Check Processing vs. Small Business
  • ACH Charges in Addition to the Processing Rate

About ACH fees

An ACH transfer is a bank-to-bank electronic money transfer that uses the ACH – Automated Clearing House network.

Money is transferred between bank accounts for paying bills via direct ACH transfers.

Users can also send money from one person to another, also called P2P (Person to Person).

Account, processing, and return fees are just a few of the fees associated with ACH payment processing

Flat fees, Percentages, and Costs for ACH Payments

For ACH transfers, there is typically a flat fee, a percentage, or both. Flat ACH fees usually range from $0.20 to $1.50 per transaction, with percentages charged from 0.5 percent to 1.5 percent.

If a company is considered high risk, it may be required to pay a higher fee. Those figures provide an idea of what to expect when paying the ACH processing fees.

On the other hand, the total cost of accepting ACH payments is dependent on several factors. But ACH costs are usually much lower than the fees associated with accepting debit and credit card payments.

The volume of transactions a company intends to process significantly impacts the cost to accept ACH payments.

Businesses with higher transaction volumes typically pay less per transaction.

Type of feetypical Cost
Flat fee (EACH transaction)$0.25- $1.75
Monthly fee$5.00 – $30.00
Percentage fee (EACH transaction)0.25$ – 0.75$
ACH return fee (EACH return)$2.00 – $5.00
chargeback fee / reversal (ACH)$5.00 – $35.00

ACH Payments for Small businesses

Accepting ACH payments might not be a suitable option for businesses or situations where quick payments are crucial in determining the success of enterprise.

On the other hand, ACH payments are best used for installment plans with only a few payments or more preferably monthly subscriptions. They may be appropriate for one-time purchases in some cases.Accepting ACH payments have the following benefits and drawbacks.

Usually less expensive than credit or debit card processing.A person may have to wait several days before receiving his funds.
Customers are typically charged no feesACH transfers are only processed Monday to Friday.
Funding times are comparable to credit cards.
Know the status of a transaction more quickly.
Make an automatically syncing electronic record 
Suitable for b2b transactions
Quick chargeback initiation

ACH’s benefits are numerous but its drawbacks are only a few. ACH (Automated clearing house) is often criticized by tech savvy individuals for its reliance on relatively old bank-dependent transaction protocols.

Some examples of how ACH demonstrates its age and limitations are listed above.

Paper Checks

Paper checks are one of the most expensive methods of payment collection. Many businesses believe that receiving payment is free, but using checks incurs labor and processing fees.

Businesses in North America processed over $18 trillion in paper checks in 2018, costing them a staggering $550 billion in profit due to delays, labor, and errors.

With costs like that, it’s no surprise that businesses are shifting away from paper checks and toward digital alternatives that provide more convenience, data, control, and automation.

These enhancements can assist businesses in lowering the costs associated with paper check processes while also reducing the amount of manual work and payment fraud risk.

Paper Check Processing vs. ACH Payments

While many people prefer paper checks for business transactions, knowing how much these cost, is surprising.

Physical check transactions typically cost between $4.00 and $20, whereas ACH processing costs between $0.26 and $0.50 per transaction.

As a result, based on this statistic alone, one can see that ACH processing provides a significant advantage over receiving traditional checks.

Not to mention, ACH payment processing provides a convenient way for businesses and organizations to transfer funds.

ACH Charges in Addition to the Processing Rate

When discussing ACH processing fees with some provider, it is a must to inquire about the ACH charges) in addition to the processing rate) mentioned below:

  • Application/Setup Fee: First off, get to know if the new company asks for one-time setup fees, ask if they use ACH service as an add-on, then try to get any setup fees turned down.
  • Monthly Fee: Either it is a separate fee for using ACH, or it could be included in someone’s monthly fee for a merchant account. You may expect to pay between $5-$30 per month.
  • ACH Reversal/Chargeback Fee: An ACH reversal/chargeback fee is assessed if a customer disputes a transaction. Usually higher than a return fee, ranging from $5 to $25 per instance.
  • High Ticket Surcharge: Because ACH was designed for low-ticket processing, some ACH account providers may charge a percentage fee for processing high-ticket items (e.g., over $5,000).
  • ACH Return Fee: If the transaction fails for any reason, a cost per return ranging between $2 and $5 has to be paid.
  • Fee for Expedited Processing: Some providers charge additional expedited processing fees, even though same day ACH processing is being done today.
  • Monthly Fee (Minimum): A person may be charged processing fee of around $10-25, Instead of monthly fee or they may have to pay the monthly fee too.

Batch Fee: Each time a set of ACH transactions are batched out (just like credit cards), a batch fee is charged, which is less than $1 per batch.

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