How E-commerce ACH Payments Work

1. Customer Authorizes Payment

   • The customer provides their bank account number and routing number at checkout.
   • They authorize the merchant to withdraw the payment via ACH debit.

2. Transaction Processing

   • The merchant submits the ACH payment request through a payment processor or ACH service provider.
   • The ACH network (regulated by NACHA) facilitates the transfer between the customer’s bank and the merchant’s bank.

3. Funds Settlement

   • Funds typically take 1-3 business days to clear.
   • Once processed, the money is deposited into the merchant’s bank account.

Use Cases of ACH Payments in E-commerce

1. Subscription & Recurring Payments

• Streaming services, software subscriptions (SaaS), and utility bills often use ACH for automatic monthly payments.
• ACH is ideal for high-value recurring transactions since it has lower fees than credit cards.

2. High-Ticket E-commerce Transactions

• Businesses selling expensive items (e.g., electronics, furniture, or B2B purchases) use ACH to avoid high credit card fees.
• ACH payments are preferred for bulk orders and wholesale purchases.

3. Membership-Based Businesses

• Gyms, online courses, and nonprofit organizations use ACH for membership fees and donations.

4. Digital Marketplaces & Invoice Payments

• Online marketplaces and freelancers accept ACH payments for invoiced transactions, reducing dependency on credit card networks.

5. Buy Now, Pay Later (BNPL) & Installment Plans

• Some BNPL providers use ACH to collect payments over time without incurring card processing fees.

Benefits of E-commerce ACH Services

✅ Lower Transaction Fees – ACH fees are much lower than credit card processing fees, saving businesses money.
✅ Reduced Chargebacks – ACH transactions have lower fraud and dispute rates compared to credit cards.
✅ Automated & Recurring Billing – Businesses can set up automatic payments, improving cash flow.
✅ Secure & Reliable – The ACH network follows strict compliance and security protocols.
✅ Higher Transaction Limits – Unlike credit cards, ACH allows for larger payments without high fees.