An ACH API is able
to offer the opportunity for developers and “software as a service” (SAAS) platforms
to debit and credit bank accounts by making use of the ACH network by using
an Application Program Interface, more commonly known as an API. This enables
the automatic ACH payment collection, disbursement and reconciliation.
If you have an
application that makes use of a recurring or subscription payment-based setup,
making use of an effective ACH Payment Gateway API is a real game changer
and will ensure a seamless user experience for platform users.
What are the Benefits of an ACH API?
You might be trying
to get your head around how ACH APIs will benefit your business. If you have
some knowledge of credit cards, ACH transactions are completed differently to
Credit cards make
use of an authorization component that tells the biller immediately that their
payment has gone through. The ACH doesn’t do this, as it operates in what is
known as a “batch environment”. This means that it can take upwards of 1 to 3
days before an issue or problem with a payment can become known. This form of
payment may be most suitable to bigger organisations who need to process a monthly
payment for each of their customers over a similar timeframe. But, it wouldn’t
be as attractive for a business who may need immediate confirmation of payment
in order to ship a product to their customer.
There are also
differences in terms of cost between the two methods described above. For
credit cards, it can cost around two or three percent of a transaction amount to
successfully process the payment. This is in contrast to an ACH payment, which usually
charges somewhere between 25 and 50 cents per transaction. Of course, these
costs can add up.
A good advantage of
an ACH payment over a credit card payment is that there are much higher decline
rates with credit cards. This is not as big an issue for ACH payments,
especially when you are needing recurring billing. This makes ACH payments an attractive
of an ACH payment over a credit card is that not every customer will have a
credit card. Also, for those customers that do have a credit card that they can
process a payment with, it provides another method for sending payment in case
for whatever reason that payment can’t be taken from a credit card, or if the card
has expired or has been stolen. If you have two payment methods, it will save
time in trying to track down missed payments.