Many business owners prefer accepting ACH payments, as processing costs are lower and the ability to set up recurring transactions is oftentimes beneficial.  However, sometimes, the processing speed of ACH transactions can be a deterrent for small businesses.

ACH payment speed has certainly improved over the past few years, however.  Until 2015, ACH transfers took up to five days.  Now, advancements have made same-day ACH settlement available.

But why do payments take so long?

One of the main reasons ACH payments are notoriously slow is because of the number of parties who must be involved.  First, a payment processor must collect their fee from the merchant.  Then, payment data is sent to the originating bank.  This bank then sends the Federal Reserve the ACH data.  Once the data is received, the Federal Reserve processes the information and sends the ACH transaction to the customer’s bank.

This slow process is often a fallback plan for risk management.  ACH payments can be rejected at any stage during the processing protocol.

ACH Processing is Done in Batches

Additionally, ACH payments are not processed in real-time, they are processed in batches.  Each batch must be completed by a certain time in order to be processed during a particular batch.

These batched processing times allow for transactions to clear the Federal Reserve before they are sent to a customer’s bank.  

Up until 2015, ACH transfers took anywhere between two to five business days.  After years of lobbying, the Automated Clearing House moved to launch a campaign known as same-day ACH.  Same-day ACH payments align every bank in the United States to process ACH transactions at the same time daily.  Not every ACH payment is automatically done on the same day, but those marked for same-day processing are often able to process much more quickly.

EFX is Your ACH Processor

EFX provides value-added functionality and a higher level of client satisfaction in the ACH space.  This has never been more important than in today’s volatile market. EFX offers white-glove customer support, providing one-on-one service while driving results, and minimizing spend.

If you would like to evaluate your current ACH processing solution, or if you have any questions regarding cost savings, please do not hesitate to reach out.