International ACH for Global B2B Payments

Payment Method Guide

International ACH (automated clearinghouse), sometimes called “global ACH”, “eCheck” or “local bank transfer,” is best understood as a concept as there is no formal standard for ACH across multiple countries. Essentially international ACH attempts to leverage the existing ACH capabilities of a country’s banks but do so from outside of that country to efficiently and cost-effectively execute cross-border payments.

International ACH can be a convenient, reliable, inexpensive global payment method if one is fully aware of the unique banking requirements of that country. It requires knowledge of the payee’s bank account and ABA routing transit number (ABA RTN) equivalents – customarily available as the first set of digits on the bottom of paper checks and deposit slips. In addition, each country has its own unique requirements. For example, in Japan, the bank’s name is required as part of the transaction, or in India, an Indian Financial System Code (IFSC) is required. In Europe, SEPA (Single Euro Payments Area) may be used.

To manually execute a high volume of global mass ACH payments, batched instructions may be able to be sent to the transmitting bank, which may or may not have an interface to specific countries. Additionally, if there is a processing error, a series of return codes are sent by the local banking network to identify the issue.

• “global ACH”

• “local bank transfer”

• “eCheck”

• “SEPA” (in Europe)

• “BACS” (in UK)

• Inexpensive

• Convenient

• Routing rules differ for every country

• Requires several days to clear funds

• Manual interface with bank

• Not designed for paying large volume of payees

• Poor support in countries with limited banking infrastructures

• Generally poor access to bank transfer API

Requires bank account and ABA routing information, including IBAN, BIC, or other local banking account information.

Best Use Case for Global ACH

International ACH is best used with a payee outside the US that doesn’t require immediate access to funds, as clearing can take several days. It is also ideal for payees that are cost conscious or where the amounts tend to be lower or payments more frequent. It is also convenient for receiving funds in local currency. Note that the destination country must have established and supported rules for banking.

Worst Use Case for Global ACH

For payees who reside in countries where limited banking infrastructure is available, international ACH methods are not an option. Also, for transactions that must be received immediately or within a day, consider other methods of remittance such as wire transfers or PayPal. International ACH methods may also not be welcome by suppliers who require paper checks as proof of payment.

How Tipalti Works with Global ACH

When international payees select international ACH during the onboarding process as their chosen method of payment, Tipalti prompts payees to enter their bank account number and routing codes and any unique requirements for their country. Tipalti checks form fields to ensure the entries have the correct character count, format, and structure as required by that country. This reduces virtually all likelihood that payments will be rejected due to incorrect information. Tipalti allows the payee to receive their funds directly in their choice of currency (if available). Tipalti also offers the payee to choose certain payment thresholds so they can decide when a wire transfer is cost effective. Payers can also determine how much or if any fees are passed to the payee.

To streamline bank communications, Tipalti directs all payments at once through various payment method interfaces. The payer does not have to directly communicate with the bank(s) or access any banking portals for remittance. Funds are pushed into the payee’s designated bank account. Should issues arise (such as the wrong account information or a frozen account), Tipalti stops payment and interprets and normalizes any banking transfer errors into standard, easy-to-understand error messages on how to correct the issue. If the payee can correct the condition, they are automatically sent a branded email on behalf of the payer with information for remedying the situation. To prevent overdraft, only adequately funded accounts will enable a transaction.

Experience the World’s Most Global Payments Automation System