ACH or Credit Cards
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Most businesses accept credit cards and consider the process fees
a cost of doing business. However by
implementing an ACH payment system you can realize dramatic savings
and increase sales.
ACH refers to the Automated Clearing House and generically means
moving money electronically to
and from checking and savings accounts. An example would be a check
by phone or taking recurring payments directly from a checking account.
The MAJOR difference between ACH and credit card processing is that
a credit card transaction captures the merchants
funds from the consumer and essentially guarantees payment. An ACH
transaction is a request to transfer funds. The transaction may
reject for several reasons with the most common being NSF (non sufficient
funds) or a closed account. The funds are not guaranteed.
It is the guarantee piece that allows the credit card company to
charge a percentage of the transaction to
cover the risks involved. Typically a transaction will consist of
a discount rate, 2.5% for example and a
transaction fee, typically in the 30 cent range. This means that
every $100 processed incurs about $2.85 in merchant fees.
Contrast this with an ACH transaction. Typically there is no discount
rate just a .30 (or less) transaction
fee. If you process $25,000 per month using ACH processing will
save around $7500 per year. ertainly you will have more failed
sales due to ACH transaction rejects (eg NSF) but your transaction
savings
will far exceed these losses. In addition you will appeal to a much
wider range of consumers. Estimates
vary but MANY people do not have credit cards or are at their limit
on their cards. So the benefits are two fold-much reduced transaction
fees and a new payment vehicle for your customers.
So consider ACH processing for your business. It will save you money and win new customers.
About the author:
Wayne Akey has helped numerous businesses save time and money
with ACH processing. Get your
free report on how your business can benefit http://www.ach-payments.com/software/secrets.doc
or visit http://www.ach-payments.com
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