Back to basics: ACH for bill payments

Electronic bill payments are only possible because of the payment methods that make digital fund transfers possible. The “big three” funding methods of electronic bill presentment and payments (EBPP) include credit cards, debit cards, and ACH transactions. While there are benefits associated with each of these payment methods, ACH dominates the transactions processed via Alacriti’s Orbipay® EBPP. In 2020, 68% of total transactions used ACH as their funding source, far outpacing debit card and credit card payments.

For those that might be unfamiliar with ACH, here’s a quick look at the basics of how it works and some of the attributes that make it a desirable choice for funding bill payments.

What is ACH?

ACH stands for the Automated Clearing House network, which moves information and money electronically between U.S. bank accounts. The network is a batch processing system that supports two types of transactions, Direct Deposit and Direct Payment. For example, Direct Deposit of paychecks from employer to employee are typically executed using ACH when the employee authorizes these transactions and provides their bank account information to their employer. Direct Payments are popular for making bill payments, both one-time and recurring because customers can automate their payments and reduce the likelihood of missing a due date.

 

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