A Complete Breakdown of ACH Fees: Comparing ACH Costs to Other Payment Methods
Payment processing fees differ for ACH and other payment methods. This guide covers automated clearing house fees and compares them to costs of other types of payment transactions. Alternatives to ACH payments include wire transfers, paper checks, credit cards, debit cards, PayPal, and Apple Pay.
What is an ACH Transfer?
An ACH transfer is an electronic bank payment transaction or money transfer from a bank account to another bank account. The Automated Clearing House and its financial institution members send payments on behalf of bank account holders.
ACH payments are used for direct deposits like payroll, Internet consumer transactions like paying an eCommerce merchant from a bank account (checking account) with ACH direct debit, tax payments, bill payments, recurring payments, account transfers, and B2B payments to vendors. Customer payments for purchases may be transmitted to a seller’s merchant account using ACH transfer.
Small businesses to large enterprises and consumers use ACH transfers.
According to Nacha, which regulates ACH transactions:
“There were 7 billion payments made on the ACH Network during the fourth quarter of 2020, reflecting an 8.9% increase over the same period in 2019.”
The Automated Clearing House offers Same Day ACH payments with dollar ACH transfer limits of $100,000 for transactions made within specified time windows and standard payments taking longer for the payee to receive. Next Day payments are also offered. Some ACH transfers take several business days to complete.
According to the U.S. government’s Federal Reserve Board website:
“On December 23, 2019, the Federal Reserve Board approved modifications to the Federal Reserve Banks’ National Settlement Service and Fedwire® Funds Service to support enhancements to the same-day ACH service.”
To learn more about ACH transfers and how ACH payments work, read the linked Tipalti article.
What is the Automated Clearing House (ACH)?
The Automated Clearing House is a network of U.S.-based Nacha direct member financial institutions and corporations, including banks, credit unions, and corporations, e-commerce companies, and payments technology providers belonging to a payments association. Nacha (National Automated Clearing House Association) issues rules and standards for ACH payment transactions and financial messaging.
What is the Difference Between an ACH Debit and an ACH Credit Transaction?
In a Tipalti article titled ACH Credit vs ACH Debit – What’s the Difference:
“The main difference between an ACH credit and an ACH debit is that a bank will send funds immediately upon the request of the payer in an ACH credit transaction, whereas the bank will send funds upon the recipient’s request in an ACH debit transaction. The difference is small but significant, where an ACH credit transaction has funds ‘pushed’ into an account, and an ACH debit transaction has funds “pulled” out of an account.”
What is the Difference Between ACH and EFT?
EFT is an electronic funds transfer. EFT includes ACH transactions, wire transfers, and other forms of online money transfers that move money from one account to another. EFT is a broader term than ACH.
How Much Does ACH Payment Processing Cost?
An ACH payment cost can range between zero and $10.00. Payment processing companies may negotiate rates with users having a high volume of ACH transactions. Banks may not charge their customers fees for ACH payments, including online bill pay. Examples of ACH payment costs by other payment processors follow.
For approved Intuit QuickBooks Payments users, Intuit Merchant Services (IMS) offers this standard pricing for ACH payment processing:
|Intuit Product||Non-Monthly Plan ($0 per month)||Monthly plan ($20 per month)|
|QuickBooks Online (QBO)||Per transaction fee: 25 cents +Per ACH: 1% of transaction amount (not exceeding $10)||Per transaction fee: 25 cents +Per ACH: 1% of transaction amount (not exceeding $10)|
|QuickBooks Desktop||Per transaction fee: 30 cents +Per ACH: $3||Per transaction fee: 30 cents +Per ACH: $3|
|QBO Standard Gmail Plug-In Transactions Pricing for customer invoicing||Per transaction fee: 25 cents +Per ACH: $1.50||Per transaction fee: 25 cents +Per ACH: $1.50|
Other ACH fees charged by Intuit Merchant Services and other payment processors are for chargeback, rejection, and additional miscellaneous fees.
The Intuit Merchant Services chargeback fee is $25 plus the full chargeback amount. The IMS ACH/electronic bank reject fee is $25. Miscellaneous ACH fees include payment network penalties, fines, and other fees.
Braintree, a PayPal company and service, offers ACH direct debit, which lets merchants accept customer payments using their bank account instead of a debit card or credit card. Braintree standard pricing for online transactions is a per-transaction fee of 30 cents + 2.9% of the transaction amount.
ACH vs. Wire Transfer Fees
What is a Wire Transfer?
A wire transfer is a type of interbank electronic payment globally using bank account number and routing number and the payor and payee names and contact information. Wire transfers do not go through the Automated Clearing House like ACH transactions and are not restricted to the United States.
Wire transfers are used in global cross-border transactions. Wire transfers are also used for substantial transactions like domestic or international real estate, which justifies the higher wire transfer cost.
How Much Do Wire Transfers Cost?
The wire transfer cost is set by the originating bank and the receiving bank, plus intermediaries used in the transaction. Costs to track and investigate a wire transfer not received by the recipient and resubmission fees increase the wire transfer cost. Wire transfer fraud is another element of potential wire transfer cost besides the transfer fees.
Wire transfer fees range between $10 and $50 for outgoing international wire transfers and $0 to $25 for outgoing international wire transfers within the U.S. The cost of international wire transfers can be higher than domestic wire transfers. Wire transfers are considered to be the most expensive payment method.
ACH vs. Paper Checks
How Much Do Paper Checks Cost?
The median cost of issuing paper checks is $3, according to the Association of Financial Professionals 2015 Payments Cost Benchmarking Survey. Bank of America indicates that the paper check cost ranges between $4 and $20.
ACH vs. Credit Card, Debit Card, Online Invoice with pay link, PayPal, and Apple Pay Fees
How Much Do Debit Card and Credit Card Transactions Cost?
Rates for debit and credit card payments transaction processing may depend on whether the card was swiped or dipped (chip cards) or manually keyed in. These costs range from about 2.6 percent to 3.5 percent of the transaction amount plus 10 to 30 cent per-transaction fees.
Square standard card processing fees are 2.6% of the transaction amount plus 10 cents for swiped and dipped debit and credit cards or 3.5% plus 15 cents for key-in card processing.
Intuit Merchant Services charges standard fees of 2.4% of transaction amount on a non-monthly fee plan (NMFP) or 1.6% on a monthly fee plan (MFP) plus 25 cents (QBO) or 30 cents (QBDT) for swiped cards. For key-in debit or credit cards, IMS charges 3.4% (NMFP) or 3.2% (MFP) Plus a 25 cents per-transaction fee for QuickBooks Online users. For QuickBooks Desktop users, IMS charges 3.5% (NMFP) or 3.3% (MFP) plus a 30 cent per-transaction fee.
How Much Do Online Invoice with Pay link Transactions Cost?
If a merchant includes a payment link in an online invoice to its customer, the cost of invoice payment processing ranges from about 2.9% to 3.5% of the transaction amount plus a 15 cent to 30 cent per-transaction fees that may depend on if it’s a Card on File transaction.
How Much Do PayPal Payments Cost?
In the U.S., PayPal merchant fees are from 2.9% of the online transaction amount plus 30 cents per transaction to 2.7% of in-store transactions plus 30 cents per transaction. For international fee transactions, add 1.5% of the transaction amount.
PayPal QR code transaction fees are lower and depend on whether the transaction amount is at least $10.01 (1.9% plus 10 cents fixed fee) or $10 and below (2.4% plus 5 cents fixed fee). For international fee transactions, add 1.5% of the transaction amount. International transactions are 1.5% higher.
How Much Do Apple Pay Payments Cost?
Apple doesn’t charge merchants to use Apple Pay, but businesses will pay their payment processors at their debit and credit card processing fee rates.
Intuit Merchant Services charges QuickBooks Online Payments users 2.9% of the transaction amount in non-monthly fee plans and 2.8% of the transaction amount in monthly fee plans plus 25 cents per transaction for either plan. For QuickBooks Desktop Payments users, the rates are 3.5% per transaction (NMFP) or 3.3% (MFP) plus a 30 cent per-transaction fee for either plan.
Summary – Automated Clearing House (ACH) Fees vs Costs of Alternative Payment Methods
This article explains what ACH payments and how costs compare to other payment methods, including wire transfers, paper checks, credit and debit cards, customer invoices with payment links, PayPal, Apple Pay. ACH fees, which range between zero and $10, are often much lower cost than wire transfer fees and compare favorably with some other payment methods.