For many high-risk merchants, expanding payment options is a transformative step toward growing their business and meeting customers’ preferences. Among all the high risk payment processing options, ACH and e-checks stand out as cost-effective and customer-friendly alternatives to traditional credit and debit card payments. In a high risk business world, embracing these payment methods can lead to notable benefits, including increased sales and improved customer loyalty.
But what is meant by ACH and Check 21 e-check payment processing, and how can they be integrated to optimize payment acceptance? Let’s take a detailed look.
Understanding ACH Payment Processing
ACH basically stands for Automated Clearing House. It is an electronic network in the United States that facilitates bank-to-bank money transfers. When a transaction is processed through ACH, the merchant submits payment information, including bank account details and transaction amounts, to the ACH network. This network then collects and batches transactions throughout the business day.
At the close of the day, ACH provides participating banks with transaction summaries for processing. Due to this batching system, ACH transactions typically take 24 to 48 hours to fully settle, depending on the banks involved.
For risky merchant accounts, ACH offers an alternative that reduces reliance on credit card networks, which can have higher fees and stricter chargeback policies. ACH processing fees are typically 5% to 20% lower than those for card transactions, making them a cost-efficient choice. Additionally, because ACH payments are batched, merchants often see fewer individual entries on their bank statements, which can stabilize their account activity.
However, it’s essential to note that banks often impose ACH transfer limits, so merchants with high transaction volumes may consider supplementing ACH with other e-check options, such as Check 21.
What is Check 21 E-Check Processing?
Check 21 is an electronic check processing system that allows merchants to handle e-check payments with greater flexibility, especially beneficial for those dealing with frequent chargebacks or returns, which are common concerns in high risk payment processing methods.
Unlike ACH, which acts strictly as a clearinghouse, Check 21 enables merchants to submit digital images of checks for quicker processing. Merchants may process payments directly through their bank or choose a payment processor to handle the transactions.
Using a payment processor, such as PayDiverse, offers merchants protection against e-check returns and insufficient funds issues. Chargebacks and returns are routed back to the processor, not the merchant’s bank, reducing the merchant’s exposure and risk.
Check 21 supports a wide range of industries and payment volumes, making it an excellent choice for merchants whose chargeback rates exceed the low thresholds acceptable for ACH processing.
Why High-Risk Merchants Should Consider High Risk Payment Processing Like ACH & E-Check
For businesses classified as high risk merchant accounts, finding payment options that reduce fees and chargebacks while expanding customer payment methods is vital. ACH and e-check processing fit these requirements well, providing several compelling benefits:
- Lower Processing Costs: ACH fees are typically significantly lower than those for credit and debit cards. Merchants benefit from cost savings that can directly improve their bottom line.
- Reduced Dispute Rates: Compared to card payments, e-checks usually experience fewer disputes and chargebacks, enhancing account stability.
- Access to a Larger Customer Base: Over 30% of adults in the United States do not have credit cards, yet more than 90% hold active checking accounts. Offering ACH or e-check payment methods allows merchants to reach customers who might otherwise be excluded.
- Customer Preference and Loyalty: Many consumers prefer paying with funds they already have rather than using credit, especially in high-risk industries where trust and transparency matter. Offering e-check payments can increase customer satisfaction and repeat business.
- Recurring Payment Capability: ACH and Check 21 support automated recurring billing. Merchants with subscription-based services, payment plans, or memberships can set up electronic withdrawals to occur on a consistent schedule, simplifying billing management.
How to Get Started with ACH & Check 21 Payment Processing
High-risk merchants interested in incorporating ACH and Check 21 payment processing solutions typically follow a straightforward onboarding process. Leading providers like PayDiverse facilitate this with streamlined applications and quick approvals:
- Apply Securely Online: Merchants submit their application through a secure digital form, providing business and banking details.
- Electronic Signatures and Documentation: Supporting documents and agreements are signed and submitted electronically for efficiency.
- Underwriting Review: The provider’s underwriting team reviews business history, prior account activity, and industry specifics to determine approval.
- Approval and Setup: Most applicants receive decisions within 24 hours. Once approved, account setup is completed quickly, often enabling merchants to start accepting ACH and e-check payments via websites or phone within 48 hours.
Alongside accepting e-checks, merchants gain access to high risk payment gateway features, including secure credit and debit card processing, real-time chargeback alerts, and fraud protection.
Industries Benefiting from ACH and Check 21 Solutions
Payment processors offering high risk payment processing solutions typically serve a wide range of sectors, including those often restricted by traditional payment gateways. Examples of industries supported by PayDiverse and similar providers include:
- Cannabis and CBD
- Payday Loans
- Nutraceuticals and Supplements
- Collection and Debt Agencies
- Automotive Roadside Assistance
- Electronic Cigarettes
- Multi-level Marketing
- Matchmaking Services
- Magazine Subscriptions
- Web Design Services
- Weapons Sales
- Accounting and Bookkeeping
This extensive list highlights the versatility of ACH and Check 21 as payment solutions for various business models facing higher chargeback risks or regulatory scrutiny.
Wrapping Up
For all merchants dealing in high-risk businesses, such as gambling and cryptocurrency, ACH and Check 21 open doors to new customers, reduce processing costs, and stabilize business operations. These high risk payment processing methods can accept payments directly from customers’ checking accounts. With a simple and swift way, you can maximize your cash flow efficiency and grow your business just the way you want.
To help you grow your business in the right direction, Cathedral Payments offers high-risk solutions. From leveraging a lightning-fast underwriting process to enjoying numerous fraud prevention and chargeback mitigation tools, you can make your payment system seamless at the most affordable prices.
Get a free rate quote from Cathedral Payments now and experience payment processing designed with your success in mind!
