ACH payment processing: How small businesses can pay and get paid faster

Consider accepting Automatic Clearing House (ACH) payments for your invoices. Not only is this convenient for your clients, boosting their satisfaction, but it can also significantly improve your cash flow and operational efficiency. Discover how one of the largest electronic funds transfer systems in the U.S. can be a game-changer for small businesses.

For small businesses, getting paid on time provides peace of mind—and keeps cash flow steady.

To keep invoices moving and payments on track, many businesses turn to the Automated Clearing House (ACH) system. ACH payment processing offers a fast and reliable way for U.S.-based businesses to send and receive funds.

Here’s how it works and why it’s an effective payment option for small businesses.

Jump to:

• What is ACH Payment Processing?
• How ACH payments benefit small businesses
• How ACH processing works
• What are the two types of ACH transactions?
• ACH payment costs and fees
• Are ACH payments safe for small businesses?
• ACH pros and cons
• What’s the difference between ACH payments, wire transfers, and EFT payments?
• How to make and receive ACH payments with ease
• With HoneyBook, simplify ACH payments and client flows
• FAQs

What is ACH Payment Processing?

ACH payment processing is a way to transfer money from one bank account to another without the hassle of using paper checks, wire transfers, credit card payments, or cash. These transactions move through the ACH, a U.S.-based electronic funds transfer system designed to handle large volumes of payments securely.

The ACH network is run by the National Automated Clearing House Association (NACHA), an independent governing body supported by a broad group of U.S. financial institutions. NACHA establishes the rules and standards that ensure ACH transactions remain secure and consistent.

Common uses of ACH payments

The ACH system processes a wide range of everyday business and consumer payments, including:

• Direct deposit for employee payroll
• Bill payments
• Direct transfers between bank accounts
• Payments to service providers
• Business expenses

How ACH payments benefit small businesses

ACH transactions come with a wide range of benefits for small businesses. 

• Fully digital system: With ACH transfers, there’s no need to handle paper checks, cash, or printed documents because everything happens electronically. 
• Low transaction fees: The cost of an ACH transfer is typically either a flat fee of $0.20 to $1.50 or a percentage fee of up to 1.5%. In comparison, credit card processing fees can reach 3.5%, so you’ll keep more of your money by using ACH payments. 
• Fast processing: Most ACH transactions take 1 to 3 days to process, with same-day payments available for an additional fee. 
• Secure: The ACH network is highly regulated and transactions are protected through bank-level security measures, reducing the risk of fraud. 
• Improved cash flow: ACH payments are quick, affordable, and predictable. Electronic invoicing helps you track payments in real time and accurately plan for future expenses. 
• Automated: Businesses can set up automated recurring payments using the ACH system, rather than manually invoicing clients for every transaction. 
• Increased customer satisfaction: Many customers appreciate the option to pay through ACH instead of credit cards or third-party systems. 

These advantages make ACH payment processing a practical, cost-effective solution for small businesses that want reliable payments without unnecessary complexity.

How ACH processing works

An ACH transfer electronically moves funds from one bank account to another. NACHA works with financial institutions across the U.S. to handle these transactions and keep them secure.

Here’s a step-by-step breakdown of the ACH payment process for small businesses:

1. Your business provides a product or service for a client, then you send them an invoice with an option for ACH payment processing through a client relationship platform, like HoneyBook.
2. The client provides their bank account number and routing number, then authorizes a transfer. 
3. The client’s bank takes the funds from their account and batches them with other payments, then sends them to an ACH operator. 
4. The ACH operator receives the batch of transactions. The ACH network currently processes four payment batches every business day. 
5. The ACH operator sorts the batch of payments, sending the deposit to your bank. 
6. Your bank receives the funds from the transaction and puts them in your account. 

Once the transfer is initiated, processing time depends on bank cutoff times, submission timing, and whether same-day ACH is used.

How long do ACH payments take?

ACH payments typically process within a few hours to three business days, depending on when the transaction is submitted. Most banks have daily cutoff times for ACH processing, so payments initiated after the cutoff will be processed on the next business day. Transfers submitted on weekends or federal holidays are also processed on the following business day. 

For faster delivery, some payment providers offer same-day ACH processing for an additional fee. The exact cost and availability depend on your bank or payment processor.

Can ACH payments be reversed?

Yes, it’s possible to reverse an ACH payment. This is a safe way to fix transactions with the wrong amount, date, or recipient or to cancel a duplicate transaction. 

To reverse these electronic payments, you’ll need to contact your bank within 24 hours of discovering the error. ACH reversals are only available for five business days after the transaction goes through.

What are the two types of ACH transactions?

There are two types of ACH payments: ACH debit and ACH credit. Here’s how they work. 

ACH debit transfers

ACH debit transfers pull funds directly from a payer’s bank account. In these transactions, the payee—the party receiving the payment—initiates the withdrawal after receiving authorization. Because the funds are pulled from the account, these transactions are often referred to as “pull payments.”

Common examples of ACH debit transactions include:

1. Mortgage payments
2. Utility bills
3. Subscription services
4. Loan payments
5. Insurance premiums
6. Membership fees

Many ACH debit transactions happen on a regular basis and can be automated, making them a convenient option for ongoing payments. 

ACH credit transfers

ACH credit transfers occur when the payer initiates the transfer of funds to the payee. Because the payer “pushes” the payment from their account, these transactions are often called “push payments.” ACH credit transfers are especially common when customers pay small business invoices.

Common examples of ACH credit transactions include:

1. Direct deposit of payroll
2. Tax refunds
3. Government benefits
4. Vendor payments
5. Person-to-person ACH to bank account transfers
6. Dividend payments
7. Customer refunds
8. Interest payments

For small businesses, ACH credit transfers offer a straightforward and reliable way to receive payments while maintaining greater control over cash flow.

ACH payment costs and fees

ACH payment fees can vary significantly depending on the timing of the transaction and your bank’s policies. 

Typical per-transaction fees may include: 

• Flat fees: $0.20–1.50 per transaction
• Percentage-based fees: 0.5–1.5% of the transaction amount

Monthly fees: 

• Account/service fee: Roughly $5–35 per month
• Minimum processing fee: About $10–25 per month

Some banks charge monthly maintenance fees for business accounts, which cover ACH processing costs. These accounts may also have one-time setup fees. 

Additional fees: 

• ACH return fee: Typically $2–5 per returned transaction
• ACH reversal/chargeback fee: Commonly $5–35 per instance

Even with these potential costs, ACH payment processing is generally more affordable than credit card processing, which can charge up to 3.5% per transaction plus $0.10–0.30 in additional fees.

Are ACH payments safe for small businesses?

Yes—ACH payments are widely considered a safe, smart choice for small businesses. Here are some of the security benefits in offering an ACH payment method. 

• Low fraud rates: ACH payments have one of the lowest fraud rates among major payment types, with fraud affecting only about $0.08 for every $10,000 in transactions.
• Strong regulatory oversight: ACH transactions operate under rules set by NACHA and oversight from the Federal Reserve, helping ensure consistency and accountability across the network.
• Required authorization: All ACH transfers require prior authorization, so money won’t leave your account without your consent. 
• Built-in consumer protections: Under the Electronic Fund Transfer Act, consumers have 60 days to report unauthorized charges with no liability.

Modern security standards: Many ACH payment providers use data encryption and tokenization to protect bank details and add an extra layer of security.

ACH pros and cons

While ACH payments offer a convenient way to move money electronically, they come with both advantages and limitations.

Pros of ACH payments

• Cost-effective: ACH payments are generally less expensive than credit cards, wire transfers, or checks.
• Convenient: ACH transfers can be automated for recurring invoices, subscriptions, or regular expenses.
• Secure: Regulatory oversight, encryption, and tokenization help protect transactions.
• Direct: Funds move directly between bank accounts, keeping account numbers confidential.
• Accurate: Electronic processing reduces the risk of human error.
• Integration options: Many accounting and invoicing software platforms support ACH payments, making financial management easier.

Cons of ACH payments

• Slower processing: ACH transfers are slower than wire transfers, typically taking 1–3 business days.
• Domestic-only: ACH is only available for domestic transactions.
• Transaction caps: Some banks cap the maximum amount that can be sent per transaction.

What’s the difference between ACH payments, wire transfers, and EFT payments?

Electronic funds transfer (EFT) is an umbrella term for all digital payments. ACH payments are one type of EFT, but there are many others.

Some examples of non-ACH EFTs include:

• Bank wire transfers
• Credit and debit card transactions
• Digital wallets, such as Apple Pay or Google Pay
• Cryptocurrency payments

Some forms of EFTs, such as cards or digital wallets, don’t require the sender to directly access a bank account.

A wire transfer is another popular type of EFT payment. Unlike ACH payments, wire transfers can be sent internationally and are processed much faster. However, they come with higher costs, often up to $60 to send and $25 to receive, depending on your bank. 

Overall, ACH payments provide a cost-effective and reliable solution for domestic transactions, while wire transfers offer speed and global reach at a premium.

How to make and receive ACH payments with ease

Most financial institutions accept ACH payments, making it a convenient option for both you and your customers. Here’s how to set up ACH payments for your business: 

1. Open a business bank account: Choose a business checking account that supports ACH origination (the ability to send ACH payments) as well as ACH receipt. During setup, ask the bank about enabling ACH features, daily transaction limits, processing timelines, and any underwriting requirements. Some banks may require a short approval process before activating ACH capabilities, especially if you plan to process higher volumes.
2. Integrate ACH into your checkout process: Work with your payment processor or accounting software to add ACH as a payment option on invoices, recurring billing pages, or your website checkout. This typically involves enabling bank transfer payments within your platform and clearly labeling the option (e.g., “Pay via bank transfer”). For recurring payments, ensure your system can securely store authorization details and automate future debits. 
3. Get customer consent: Before initiating an ACH debit, customers must provide their bank account and routing numbers and formally authorize the transaction. Authorization can be collected online (via a digital form and checkbox), over the phone (with recorded consent), or in writing. The authorization should clearly state the payment amount, the timing, and how the customer can revoke permission. 
4. Initiate the payment: Once you’ve collected the necessary details and authorization, submit the ACH payment through your bank or payment processor. You’ll enter the customer’s banking information, the amount, and the payment date. Funds are typically processed within one to three business days, depending on your bank and whether you’re sending or receiving funds.

With HoneyBook, simplify ACH payments and client flows

HoneyBook makes it easy for your small business to accept ACH payments. By adding ACH transfer options to your invoices, you give clients a fast, secure, and cost-effective way to pay.
And that’s just the beginning. HoneyBook also helps you create winning contracts and proposals, track client interactions, schedule meetings, and more with AI-powered support every step of the way. Simplify your business and get started with HoneyBook for free today.

FAQs

What are the key differences between ACH credits and ACH debits? 

An ACH credit “pushes” money from your account to a recipient, while an ACH debit “pulls” funds from a payer’s account. The key difference lies in who initiates the payment and who has control over the timing.

How long does a standard ACH transaction take? 

Standard ACH transfers typically settle in one to three business days. While credits can post as early as the next day, debits often take longer due to banks verifying sufficient funds before processing. 

What are the downsides of ACH payments? 

The main drawbacks include slower processing speeds compared to wire transfers and the risk of rejection due to non-sufficient funds. Additionally, the ACH network operates only in the US, limiting its use for international business.