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How is ACH different than a credit card?

Credit cards are authorized/approved in real time, by the customer's issuing bank. ACH payments are not approved until later, and take longer to process.

Credit cards utilize a Credit Card Network (such as Visa, MasterCard, Discover, Amex) to verify whether a cardholder is within their credit limit. Learn about the  authorization and capture process here. When a merchant initializes a credit card sale, the network approves or declines the transaction in real-time. Assuming the sale is approved, the funds are guaranteed to the merchant. The customer's  issuing bank has decided, in real-time, that this sale was approved based on all of the information present at the time of the transaction. As such, barring a dispute, the merchant is entitled to those funds - even if the customer goes bankrupt, the issuing bank is responsible for paying those funds to the merchant. Essentially, from a merchant perspective, if you get an "approved" response from a credit card, you're set to assume you'll get paid for this sale. (Barring a potential chargeback!)

ACH processing, on the other hand, is an electronic fund transfer between two financial institutions. When a merchant initializes a ACH transaction they are merely making a request for the funds to be transferred. An ACH transaction can take a few days to fully process and can be rejected by one of the financial institutions for a number of reasons, for example the account debited has insufficient funds. Naturally - this is riskier for some merchants. Retail merchants need real-time authorizations to combat fraud. So, ACH payments are typically much better for the following merchant types:

  • Recurring payments for insurance, mortgages, car payments, bills, utilities, etc.

  • B2B payments between trusted vendors

  • Healthcare / gym / spa payments

  • Monthly memberships or digital goods

We're serious about saving money.

AND is dedicated to getting your processing rates as close to zero as possible. We utilize membership pricing along with cash discounting and surcharging programs to maximize savings. Let our analysts review your statements and see how much money we can put back in your pockets. 

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