Most of our customers accepts credit cards. Very few of our customers accept ACH or electronic check- more should. There is a huge savings if you process your transactions via ACH or electronic check.

This month we took a close look at fee differences between credit card processing and electronic check processing otherwise known as ACH (automated clearing house).

It works like this: one of our customers generated about $26,500 in ACH billing last month and the total fees charged were $46.94.

If that customer had accepted that $26,500 with credit cards, they would have paid approximately $821 in fees instead of $47. These are substantial savings, aren't they?

Companies pay on average 3.0% in fees to accept and process credit cards transactions, which is 93% too much. Dividing 46.94 by 26,500 gives us the fees as a percentage of the volume of business, which is about 0.15 percent.

With ACH processing, this client saved around 95% over credit card processing fees- awesome!

Instead of paying 3% in processing fees, this client paid 0.15% (that is 1/15th of 1 percent) to accept payments via ACH – a 95% cost savings. Like our customer, we encourage every one of our own customers to pay our invoices via ACH rather than credit card. The cost savings to us is huge! This allows us to save hundreds of dollars a month.

Accepting payment by ACH vs credit cards

Service companies ( saas, enterprise software, ISP (Internet Service Providers), maintenance, technology support) can benefit the most from ACH versus credit cards. We recently helped a software company open an ACH account. Instead of processing credit cards or waiting for paper checks to arrive in the mail, they are billing their customers electronically. The benefit is in cash flow and time savings. They are setting-up their monthly service customers to pay by recurring ACH on an agreed-upon date each month. This stabilizes cash flow, reduces trips to the post office and the bank, and eliminates the 5-10 days of transit time before the money is deposited in the bank. Well worth the 1/15th of 1 percent fee.