ACH Transaction fees and the Hidden Costs of Check Processing

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

Electronic Fund Transfer is abbreviated as EFT. It is the process of electronically transferring funds from one bank account to another.

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 Automated Clearing House (ACH) network.

Money is transferred from one bank account to another 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 typically 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 varies depending on several factors. But ACH fees 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 of accepting ACH payments.

Businesses with higher transaction volumes typically pay less per transaction.

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

ACH Payments for Small businesses

Accepting ACH isn’t right for every small business or every situation. Some other payment types should be used when a person wants to have the money before the customer walks out the door.

On the other hand, ACH payments can be ideal for monthly subscriptions or even installment plans with only a few payments. They may be appropriate for one-time purchases in some cases.

The following are some benefits and drawbacks of accepting ACH payments.

Usually less expensive than debit or credit 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 through Friday.
Funding times are comparable to credit cards.
Know the status of a transaction more quickly.
Make an electronic record that can be automatically synced.
Suitable for b2b transactions
Shorter period for chargeback initiation

The list of ACH benefits is much longer than the list of ACH drawbacks. This is due to the weaknesses of competing payment methods as well as the strengths of ACH payments.

Most of ACH’s detractors point to its reliance on ancient (in tech terms) 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 costs are 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 fees and processing with any provider, it is necessary to inquire about the following ACH charges in addition to the processing rate:

  • Setup/Application Fee: Be on the lookout for any one-time setup fees, especially if this your first time working with the company. If the business intends to use ACH as an add-on service, try to get any setup fees waived.
  • Monthly Fee: This could be 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 and $30 per month.
  • Monthly Minimum Fee: A person may be charged a minimum processing fee for ACH instead of or in addition to a monthly fee. This could be $10-25.
  • Batch Fee: Like credit cards, this ACH fee is charged each time an set of ACH transactions are batched out. It should cost less than $1 per batch.
  • ACH Return Fee: Charged if the transaction fails for any number of reasons. Typically, the cost per return ranges between $2 and $5.
  • 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).

Fee for Expedited Processing: While same-day ACH processing is becoming more common, some providers may still charge additional expedited processing fees.

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