ACH vs. Credit and Debit Cards.

ACH vs. Credit and Debit Cards: Differences and Similarities

While you might already accept credit and debit cards from your customers, you could also consider accepting ACH payments. Let us understand the major differences and similarities between ACH vs. Credit and Debit Cards.

ACH transactions are Automated Clearing House deals where you will draw funds from a customer’s checking or bank account. The funds will come directly from one of those accounts and work without any other outside parties entering the picture.

ACH transactions do have a few similarities to card-based payments. These solutions both entail collecting funds from a monetary line. But there are a few significant differences to note. These include differences surrounding the types of people who use them and what transactions they support.

ACH vs. Credit and Debit Cards – The Differences and Similarities

The Process 

time for a credit card to process a payment

First, let’s look at how the processes these two payment choices follow differ. The major difference between ACH vs. Credit and Debit Cards is the process. A credit or debit card transaction will entail a third party like a merchant service provider sending card data to your bank. Your bank will approve the request and send that data to the card’s bank. The funds will be transferred to your merchant bank account after the approval is complete.

An ACH transaction entails the customer sending data on one’s bank or checking account to your company. The ACH data works for direct deposit transactions or scheduled or automated payments. Funds are transferred from the bank account and will move to an originating bank’s ACH payment batch. The batch payment then travels to your bank account.

Both transactions are similar in that they draw upon different accounts a customer has. But the ACH focuses on a banking or checking account, while a credit card will entail a line of credit.

A debit card is slightly more similar to an ACH deal, as it can also involve a bank or checking account. But not all debit cards can work on credit card networks.

Fund Guarantees

fund guarantee

Another major difference between ACH vs. Credit and Debit Cards is the fund guarantee. Always remember an ACH transaction will not guarantee payment. The ACH transaction is a request for funds. The payment must be approved and added through a payment batch that the bank will process.

It will take a few business days for the bank to collect enough funds for its batch and to send them to the parties that are owed the funds. But the bank will hold these funds in a separate space to ensure the bank doesn’t use those funds for other purposes.

A credit or debit card transaction will be easier to guarantee. A card network will review the customer’s credit limit and then determine if that person is capable of completing the payment. You are guaranteed the funds after the network confirms the deal. It can take a few moments to confirm the deal by reviewing the content through a credit network.

What Are the Charges?


ACH transactions are less expensive than card-based ones. An ACH transaction can cost less than a dollar to process. For percentage-based plans, it may cost less than 1 percent of the total value of the payment. In short when you are considering choosing between ACH vs. Credit and Debit Cards then ACH transactions are cheaper.

You’d have to spend 2 percent or more of the value of a credit card transaction to process the deal. Debit cards cost less to manage, but they might still be at around 1.5 percent.

How Long Does It Take?

The timing for collecting funds from a transaction will vary by payment option. You can spend a few business days waiting on your ACH payment. The bank will need to hold the funds and confirm the transaction data to ensure you receive a suitable payment.

A credit card transaction will take less time to complete. It might work instantly, although the timing can still take a few days, depending on how busy the network is with other payments.

Concerns About Losses

You could still experience losses regardless of which payment choice you support. The types of losses you’ll find will vary surrounding the payment method.

For credit cards, you might experience chargebacks. A chargeback occurs when a customer disputes a charge on a card. You will have to return the funds to that person if this happens. Your perceived risk may be higher if you have more chargebacks, thus prompting you to spend more to process transactions.

An ACH account may be subject to scams. You might lose money if someone acquires something, and it turns out that person has insufficient funds to cover the purchase. The person will not be capable of paying for something, causing you to lose assets because someone scammed you out of a deal.

All ACH and card-based deals work on trust. Most people aren’t going to try and scam you out of anything, whether it entails not having enough funds or trying to commit friendly fraud. But the losses you may find could still be dramatic.

Common Items For Purchase

An ACH deal is likely to work for recurring payments. These include subscription-based payments or monthly dues where someone can be automatically billed for something.

Card payments are for one-off moves. These include purchases of various high-value items.

These payments can still work for anything. But those are the payments people are more likely to manage above others with these two methods.

Who Uses These Payments?

Poor or good credit rating is one of the major factors. It determines the type of user when it comes to ACH vs. Credit and Debit Cards. The next comparison to see entails the types of people who handle these payments. Customers might use credit cards if they are looking to purchase more valuable items, or they might have positive credit ratings. People with good credit are more likely to have credit cards.

Meanwhile, those with poor credit are more likely to use ACH transactions. They might not qualify to use credit cards. They may also prefer using ACH transfers because they know where the money is going. They don’t have to pay off a card later on either, making it convenient. 

Which Is the Better Option?

The best idea to follow is to support both ACH and card transactions. All customers have unique preferences for what payment methods they wish to utilize. Providing support for these two always helps. Talk with a merchant services provider today to learn about how you can work with these two solutions.

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