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ACH Vs Credit Cards: Differences and Advantages

REPAY offers a variety of merchant services that agencies can use to collect payments from their clients. Two of them are the ability to accept credit cards and Automated Clearing House (ACH) payment processing. But what are the advantages of these, what are the differences and under which payment scenarios should you use them? We will talk about that in this article.


ACH is a generic term that encompasses various forms of transferring funds electronically between two financial institutions, such as checks, echecks and recurring payments taken directly and electronically from checking or savings accounts. Credit card transactions are just that; the transaction is made through the credit network of the issuing card. Credit cards are revolving debt instruments that enable individuals to use borrowed money to make purchases or payments.


The single most significant difference between ACH processing and credit card transactions is guarantee of payment. Credit cards utilize a network (such as Visa and Mastercard) to verify whether somebody is within their credit limit and then, after the network approves the trade, those funds are guaranteed to the merchant. This is known as a “guaranteed funds” transaction.

ACH, by comparison, does not guarantee the funds. An ACH transaction is only a request for funds. The transactions are usually batched together and sent out for processing once a day. This can cause delays of several days to settle the transaction. ACH transactions can also be rejected for reasons such as Non-Sufficient Funds (NSF) or a closed account and the payment-acceptor will not know until several days later.

So what is the number one benefit of using ACH over credit card processing? Lower fees. ACH transactions usually have the lowest fees of any payment system. A credit card’s fee is typically around 2.5% of the value of the transaction plus a processing fee. ACH transactions usually cost about $0.30 total. The cost savings with ACH transactions can add up quickly.

Which should you offer to your clients?

Ideally, both! Consumers have different preferences for payment, so it is a good idea to have both available.

REPAY offers a variety of merchant services including ACH and credit card acceptance to give you flexibility in your collections process.

To learn more, contact us today.

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