The Automated Clearing House, or ACH, network now sits firmly at the center of America’s bustling economy. In 2015:
- More than 24 billion electronic payments passed through millions of financial portals, totaling more than $41 trillion in transactions.
- More than 5 billion direct deposits ensured the swift delivery of funds to payees.
- ACH business-to-business transactions grew by over 8 percent year over year.
Apparently, much of the industrial community has embraced the convenience of the ACH network, and their statistics demonstrate its benefits to companies that have not yet taken the leap to electronic financial management.
ACH Payment Benefits for Companies
ACH transactions offer numerous benefits to companies, including the ability to:
1. Redirect Manpower to More Critical Functions
Automated transaction programming reduces the number of staff needed for processing and handling, and it frees those employees to focus on other, more important company work. The company gains HR resources but avoids added cost by redirecting its workforce to attend instead to new financial products, added services or other efforts designed to grow the company.
2. Reduce Transaction Costs
By switching transaction initiation from employee-driven to automated-account-based, the business reduces or eliminates processing and handling fees, which can increase overall revenues. The extra revenues can improve annual corporate returns, reduce customer costs (and thereby increase customer loyalty), or both.
3. Add Security to Every Transaction
Automated processing reduces the number of exposure instances experienced by any single transaction. Paper checks, for example, must be physically handled at multiple points throughout the transaction, each of which poses the risk of data breach.
4. Reduce Environmental Impact
Eliminating the environmental waste generated by those paper checks (and related paper statements, notices, etc.) can also attract new customers while encouraging additional loyalty from existing patrons.
Consumers Also Reap ACH Benefits
From the user perspective, ACH transaction processing also adds value to the banking experience. In a 2015 study on consumer preferences, both the security and speed of digital transactions were shown to influence a purchaser’s willingness to engage in automated systems. The benefits to the customer include:
1. Critical Data Security Assurance
Two security issues topped the list of consumer-ranked protections enhanced through ACH practices: The prevention of financial and privacy losses. Because not just the transaction is programmed but also the entire financial system, safeguards are installed at each transactional juncture to remove human error or intentional intervention as a risk. Consequently, digital processing reduces the number of vulnerabilities to which each individual transaction is exposed, keeping both personal and financial data safe.
2. Faster Transaction Speeds
Consumers reported higher levels of satisfaction from several aspects of the electronic transfer opportunity:
- ACH capacity permits faster availability of funds. Rather than waiting for paper checks to clear or risking carrying excess volumes of cash, the almost immediate deposit of ACH-transferred funds into the payee’s account was ranked high on study respondent’s list of preferred benefits.
- The majority of respondents indicated that the speed of a deduction from their account was as valuable to them as the speed at which they received payments, so they were more likely to use automated payment deduction services to pay bills, etc.
- ACH service also improved consumer notification of both the initiation of the transaction within their account and when those funds left the account altogether.
Customers who experienced the levels of visibility and control over their financial status facilitated by ACH processing reported being highly satisfied with their financial institution.
Both businesses and their customers benefit from electronic payment systems through reduced costs, faster processing times and added convenience.