When we think of business transactions, the majority of us probably think of utilizing cash, credit, or debit cards. Most big businesses accept major credit cards and pay hefty processing fees without a problem. But for startups that might have small budgets or are more carefully managing their cash flow, these fees can pile up.

On average, credit cards charge between 1.5% - 3% for each transaction. ACH payments offer small businesses and startups a payment alternative that works quicker than other forms of payment.

This blog post will explore the different options and help you find the best ACH processors for your business.

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What Are ACH Payments?

ACH stands for automated clearing house network run by the NACHA (national automated clearing house). ACH payments have been around since 1974 as an electric form of transferring funds. ACH is a batch network processing system used by large financial institutions like banks to process large quantities of different transactions from one bank account to another. 

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Businesses use ACH systems when using direct deposit for payroll, and the IRS uses ACH for tax refunds and other government deposits. You can use ACH payments for recurring bills to cover operating and other business-related expenses. 

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ACH Payments Vs. Credit Card Payments

ACH transactions and credit card transactions have two key differences to consider. ACH transactions have lower transaction costs compared to credit cards. ACH transaction fees remain around 1% or $.30 altogether. 

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Credit cards run on networks monitored by the card supplier, meaning there is a process of checking the card for the amount needed to trade. Once confirmed, the funds are guaranteed to process. ACH transactions are technically requests without a guarantee because they are sent in batches. 

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Non-guaranteed payments only affect a business if they are choosing to accept ACH payments from clients. If you're considering paying vendors and other business expenses with ACH payments, the batch processing shouldn’t be too big of a worry. 

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The 6 Best ACH Processors

1. Dharma

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We picked Dharma because of the low monthly cost, low transaction fee, and processing tech offered to accept multiple versions of payments such as eChecks, credit cards, or paper checks. Dharma’s versatility is great for startups looking for an all-in-one payment processor.

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Pros:

• eCheck (virtual checks) are accepted readily

• Paper checks are accepted with manual entry in the payment portal

• Upload checks via a mobile device through the camera and then upload them to the payment portal

• Auto bill payments are optional

• Non-profit discounts

• Month-to-month subscription billing

• B2B Processing

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Cons:

• Virtual Terminal and mobile processing costs extra

• Closure Fees

• In order to accept ACH payments through Dharma you need a merchant account regardless of plans to accept debit/credit cards.

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Costs: 

• $25.00 Monthly fee for the basic plan

• $20.00 Monthly merchant fee

• Transaction Fees

• Transactions less than $100 = $0.40

• Transactions from $100-$1000 = 0.10% + $0.40

• Transactions greater than $1000 = 0.20% + $0.40

• $2.00 return item fee

• $5.00 reversal fee

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2. Stripe

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Stripe is a well-known transaction platform with a robust transaction system. Stripe offers corporate credit cards and ACH payment processing services. Businesses at any stage can use 

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stripe for ACH payments. However, Stripe has a list of prohibited businesses they do not service, all of which fall within the “high-risk” category. Unfortunately, clients aren’t always flagged as high-risk until after they begin using Stripe’s processes to accept payments, so be sure to ask about this prior to onboarding.

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Pros:

• Flat rate pricing

• International currency support

• Marketplace tools included

• Multicurrency accepted

• Advanced reporting

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Cons:

• Integration set-up requires technical skill or developer for customizable resources

• Complex installation process

• Two-day deposit speed

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Costs: 

• Credit cards (not present) 2.9% + $.30

• Credit cards (present) 2.7% + $.05

• International 1%/transaction

• ACH .8% capped at $5

• Chargeback $15

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3. Payment Cloud

Payment cloud specializes in “high-risk” businesses (travel, for example). You don’t need to be in a high-risk group to use Payment cloud, but it's a plus for those who are. Dharma and Stripe refer clients they cannot support to Payment Cloud because of their ability to handle higher-risk businesses. 

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Merchants with a large percentage of card-not-present transactions are considered a higher risk. This is why other ACH processors like Dharma deny clients but refer over to PaymentCloud. 

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Pros:

• No set up fees

• Low-risk clients have no monthly minimum 

• High-ranking customer support

• Bank partnerships

• Virtual shopping cart integration for eCommerce businesses 

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Cons

• Long approval times

• Hidden fees (reported by some customers)

• High fees for non-high-risk businesses

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Costs: 

• Payment Cloud does not list costs publicly. Get a price quote here.

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4. National Processing

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Small businesses, high-volume businesses, or startups aiming to expand benefit from using National Processing over larger platforms because of their pricing. They work with companies with low-processing rates while providing B2B services, but this ACH transfer service is ideal for employer-to-employee direct deposit.

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Pros:

• Three low rate plans for small businesses

• Low recurring fee ($10)

• Low batch fee ($.10)

• No application fee

• B2B Processing

• Rate-lock guarantees on plans

• Plans for higher businesses

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Cons:

• PCI fees

• Incidental fees

• High termination fee

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Costs: 

• $15/month 0-1.5% + $0.48

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5. Carat

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Carat’s software supports world-recognized banks like Wells Fargo and Chase for easy international ACH payments. Carat’s mobile app makes it easy for businesses to one-step enroll their clients using their bank log-in for easy bank-to-bank transfers. Another cool feature is their customization options. You can create individual channels for ACH payments and eCheck acceptance based on your business needs.

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Pros:

• 98% Transaction approval rate

• Customizable payment tunnels

• International bank support

• Next-day funding

• No chargeback fees

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Cons:

• High and excessive service fees

• Uses resellers

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Costs: 

• Carat does not list prices publicly. Apply for a quote here.

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6. Stax

Stax is another well-known processor that can be a good fit for businesses that process a minimum of $5,000 per month in transactions. With Stax, companies have the option to schedule recurring invoices and automate reminders for on-time payment consistency. As an all-in-one processor, Stax accepts eChecks, ACH payments, and others to make it easier for their clients to operate in a way that fits their business.  

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Pros:

• Multiple payment types are accepted

• No contracts

• Next-day payout timing

• Good technical support is available 24/7 

• Integrations with popular software like *Quickbooks

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Cons:

• High subscription cost

• Companies have to purchase their hardware

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Costs:

• Growth: $99/month

• Pro: $159/month

• Ultimate: $199/month

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Monitoring ACH Payments 

ACH payments are recorded in accounts payable or accounts receivable, depending on your company’s use of the ACH process. Each settlement needs to be accurately accounted for in your company’s books for a solid picture of your company’s financial standing. 

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Tax purposes: When tax time comes, the IRS will scrutinize your income to determine the amount of income tax owed. Issues with the IRS lengthen the amount of time you’ll receive your refund, if applicable, and can tie up other cash if you owe more to the IRS. 

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Vendor relationships: An error in the amount paid vs. the amount owed for expenses can result in late fees and a strained vendor relationship. If the error isn’t caught immediately, it can result in contract termination or higher fees that stack up over time.

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Using traditional bookkeeping services means waiting on your books to be completed. We understand the importance of having a crystal clear view of your finances in real-time, so we created Zeni. Paired with an experienced team of controllers, our bookkeeping software gives you access to real-time financial data 24/7.