Why do some consumers prefer ACH payments?

Is remembering to send your mortgage payment or car payment on time a challenge every month? Do you find yourself paying late even though you have the funds in your account? Such actions can wreak havoc with your credit score. Using ACH payments can help avoid late payments and the associated fees by debiting your account automatically for recurring payments.

What are ACH payments?

ACH stands for Automated Clearing House. ACH payments are payments that are electronically deducted every month on a given date from a consumer’s bank account. These payments are generally used for fixed recurring debits, such as mortgage payments, car payments, insurance payments, payments to the IRS, or payments on an installment loan, but some consumers also prefer to make one-time ACH payments, as well. When combined with direct deposit of your paycheck, such payments help remove a lot of the hassle associated with paying your bills each month.

What advantages do ACH payments have over paper checks?

Automated payments offer consumers a number of advantages versus writing paper checks. These include:

• Convenience. With an automated payment, you don’t have to worry about writing a check, finding a stamp, and getting it into the mail on time. If you travel on business frequently, you also have peace of mind knowing that your bills are being paid even when you’re away from home.
• Safety. With an ACH payment, you can see if your payment was received quicker, unlike a mailed payment. Plus, there’s no chance that your check is lost or stolen en route.
• Speed. Your payment arrives more quickly with an ACH payment than if you mail a check.
• Savings. Some companies may offer a discount to consumers who opt to pay their premiums via an ACH payment. In addition, with automated payments, you save by not having to purchase so many paper checks and stamps.
• Reduced errors. With an automated payment, you don’t run the risk of forgetting to sign your check or entering the wrong amount. Once you set up your payment, the same amount is deducted each month.

More bank transactions are completed by ACH payments each year than by paper checks, and the number of such payments is growing steadily. In 2018, the number of ACH payments exceeded the number of check payments for the first time.¹

Some consumers prefer one-time ACH payments

There’s no question many consumers appreciate the speed and convenience of ACH payments. Although recurring ACH payments are great for certain verticals, many consumers still prefer one-time ACH payments.

Here are a couple of reasons why:

One-time ACH payments provide users with greater control over their finances.

The exact amount of cable television, mobile phone coverage, or utility bills may vary based on usage each month. Because of these month-to-month changes in spending, many consumers want the ability to inspect their bills before paying them. There may be some invoices with mistakes and extra charges that shouldn’t apply.

One-time ACH payments are safer than recurring billing (or rather, “perceived” safer).

With ACH payments, vendors have direct access to consumers’ bank accounts. While credit card companies often provide fraud protection, banks won’t always cover losses in the event of hacking or theft. As a result, some consumers are uncomfortable with the idea of “autopilot” payments if there’s no buffer between vendors and sensitive financial data. Some consumers may feel uncomfortable with the idea of recurring payments (as a consumer), but they may have no problem with regular paychecks deposited directly into their bank accounts (as employees).

Want to learn more about accepting ACH?

As a business owner, accepting ACH payments makes it convenient for your customers to pay for goods and services, which helps improve your cash flow and boost profitability.

Contact the Clover sales team to find out which Clover or partner solution is right for you.

1 “The 2019 Federal Reserve Payments Study,” Federal Reserve

Editorial Team

Payments & processing

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