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