Explore the Value of ACH Payments Between Businesses

ACH payments are a modern and secure method for processing fund transfers. Explore the value of this payment type for transactions between businesses.


What Are Business to Business ACH Payments?

Business to business ACH payments are electronic fund transfers between two companies. These electronic transfers occur in the Automated Clearing House (ACH) network and eliminate the need for paper trails that come with checks, money orders and other conventional payment methods.

ACH is a widely used electronic payment system in the United States and internationally. With this network so widely recognized, it can be an ideal solution for business to business payments between companies that are located in different states or countries.

Business to business transactions encompass a wide range of corporate processes, from paying advertisers and shipping companies to covering rent for office spaces. While many individuals have stopped using checks for their day-to-day payments, many businesses are still relying on these slips of paper to make large payments to other businesses. With corporate ACH payments, businesses can streamline a significant aspect of operations.


How Does Business to Business ACH Work?

All ACH payments start with two bank accounts—the Originating Depository Financial Institute (ODFI) and the Receiving Depository Financial Institute (RDFI). Essentially, there’s a bank account requesting a payment, the RDFI, and an account sending money to respond to the request, the ODFI.

In B2B ACH payments, this arrangement stays the same. However, rather than a corporate bank account and a consumer bank account, the transaction happens between two corporate accounts. The Clearing House or the Federal Reserve oversees the transaction by storing and processing the funds. Since these transactions are not direct from bank to bank, they can take one to two days to process.

The entire ACH process can be divided into four steps:

  • Authorization: Before funds can move from one account to another, the ODFI needs authorization from the owner of the account to transfer funds through ACH. During authorization, the business will have to provide the account and routing numbers for the corporate account and other details to verify the use of their funds. As a business requesting this authorization, you may send an email with a link to the accounting department, so they can complete the authorization process.
  • Initiation: The business then sends its information to the ACH provider or ODFI to initiate the transaction.
  • Request: After initiating the transaction, the ODFI can send a payment request to the RDFI to receive the necessary funds for a product or service.
  • Processing: As long as all information is correct and the RDFI account has enough funds to complete the request, processing can begin. The funds move from the RDFI account to the ODFI, and the business receiving funds will officially be paid for their product or service.


Benefits of B2B ACH Payments

Using ACH payments for your B2B transactions has many advantages, including:

  • Simplicity: ACH payments are easy to set up with the right ACH provider. Both companies involved only need to provide account information for their corporate bank accounts and work with a provider who supports the process. Most banks allow the ACH process to occur with authorization, so there’s no need to have a special account or change the way you manage financials for your business.
  • Speed: While there is a processing window for ACH payments, it is typically only a few days maximum. Even with this processing time, businesses will receive confirmation that funds are entering their account before they officially arrive. This aspect makes business to business ACH debit much easier than checks. Accounting teams don’t need to reconcile the bank account with several outstanding checks that have not yet been cashed.
  • Security: With many businesses still relying on checks for B2B payments, check fraud is a possibility. Businesses are particularly at risk because they send multiple checks with large amounts. ACH payments are completely electronic and verified through your ACH platform, so you know you’re genuinely receiving money from your client businesses, and information like account and routing numbers is kept private.
  • No processing fees: ACH payments are free of all processing fees, which is a major benefit to businesses that transfer money frequently between suppliers, clients and beyond. With so many transactions, small fees can add up and lead to large costs at the end of a month.
  • Low transaction fees: Transaction fees for ACH payments are often free or low in cost, depending on the financial institutions involved. Compared to wire transfers or credit card processing, these fees are incredibly cost-effective.
  • Electronic records: ACH payments have a clear electronic record you can access at any time, so it’s easy to manage invoicing processes, and you can cut down on paper records.


Implement ACH Processing With CSG Forte

CSG Forte’s Dex payments platform is the key to implementing ACH processing for your B2B transactions. Manage online, in-person and over the phone payments with a unified, cloud-based solution. With transparent reporting, you can stay connected to every transaction and manage your funds more efficiently.

Get in touch with us today to learn more or make an account with us to get started.

Process Fast, Secure Payments Using Merchant Services

Are you opening a retail store in a brick-and-mortar establishment? Creating an online storefront? Customers who visit you in person or online will likely pay electronically via a debit card, credit card contactless pay or mobile device. How can your retail store capture this cardholder data and turn it into a quick and secure payment?

Merchant service providers can help you manage payment card transactions and accept multiple payment methods. They offer the products and systems your business needs to streamline card payment processing. As a result, you’ll increase your revenue, strengthen customer loyalty and grow your business.


What Are Merchant Services?

Merchants need reliable services and equipment to accept and process customer payments through credit cards, debit cards and other electronic payment methods. Merchant services operate through a merchant account that the merchant sets up and may be able to integrate with their existing software.

These tools are essential because they help you accept and process payments in a way that benefits both you and your customers. Customer payments help you grow your business, so merchant services are critical for capturing more customers and income.

What Merchant Services and Products Does Your Business Need?

Some examples of merchant services and products include:

  • Payment gateways: Payment gateway software works with the merchant’s website or e-commerce store to take and process online card payments. The payment gateway functions as a digital credit card terminal.
  • Virtual terminals: Virtual terminals are software applications merchants can use to accept card payments when the physical card is not present.
  • Credit card terminals: Credit card terminals (or electronic data capture terminals) allow merchants to accept in-person card payments. The customer can swipe, insert or tap their card to pay.
  • E-commerce platforms and services: E-commerce software sets up and operates online stores so customers can buy products online. E-commerce merchant services support payment card transactions in the online store.
  • Point-of-sale systems: The point-of-sale (POS) system is the equipment that takes customer payments for a merchant’s products or services. POS transactions occur when the customer pays in a physical store.
  • Mobile payments: Mobile payments allow customers to pay for a product or service via portable electronic devices like tablets and cell phones. This service also includes sending money to individuals through applications like PayPal and Venmo.
  • Contactless payments: Contactless payments use near-field communication or radio-frequency identification to make secure transactions. Payment options include Apple Pay, Google Pay, Fitbit Pay, Android Pay, credit and debit cards, and similar devices.
  • Business management software and applications: Business management tools manage orders, inventory, customers, employees and other business aspects.


What Is a Merchant Service Provider?

A merchant service provider is the third party serving as the go-between for your business, your customers’ payment card providers and your customers by offering different types of merchant products. Each merchant service provider offers specific equipment and services for electronic transactions. Examples of merchant service providers include:

Merchant service providers have three primary purposes:

  • Manage and process card payments
  • Secure cardholder data
  • Provide the technology and tools to collect card payments 

Some merchant service providers offer more services to improve transactions, such as managing gift cards and loyalty programs and supporting business operations through inventory management and report generation.

Payment Processing

The main purpose of a merchant service provider is to manage cardholder data and process payments. They will:

  • Gather payment card and transaction information
  • Receive authorization or denial to complete the transaction
  • Collect the funds from the bank or institution that issued the payment card
  • Send you the money after charging the interchange fee and other fees

Payment Security

Payment security from a merchant service provider protects the data from credit card transactions, online payments and cardholder data storage. As a result, your customers and business can make safe and secure transactions.

Merchant service providers also assist your company in complying with the standards and regulations of the payment card industry (PCI). Compliance ensures your cardholder data stays secure through proactive security measures to prevent lost data. Payment security can include methods like tokenization and encryption.

Technology Provider

Accepting card payments requires the right technology, and merchant service providers can provide it through their products and services. As the technology provider, your merchant service provider also gathers and reports data about your business’s card payments. You’ll learn valuable information, such as:

  • Which customers you get the most revenue from
  • The most popular times of the day, month and year for transactions
  • Underperforming products and services that could be improved or removed

Every merchant service provider is different regarding the technology they offer and the fees they charge for the equipment and processing transactions.


Reasons To Have a Merchant Service Provider

With a merchant service provider, you can accept card payments while maintaining security standards to protect your business and your customers’ sensitive data. From the point of sale onward, your merchant service provider will manage the transaction data to ensure the process is smooth and secure and that you receive your payment quickly. You can trust them to process your payments while you focus on running and growing your business.

Merchant service providers offer several advantages to merchants. These companies:


What Is a Merchant Account?

A merchant account is a specialized bank account that helps businesses process electronic payments. Unlike a standard bank account, this account is strictly used for the business purpose of making and accepting payments. The merchant account holds funds before they are cleared to transfer to your business’s primary bank account. With a merchant account and payment gateway, you can accept card transactions from customers.

How Can a Merchant Account Benefit Your Small Business?

A merchant account provider can set your company up with everything you need to get started. This account establishes a business relationship between your company and the merchant service provider, which offers several benefits for small businesses. With a merchant account, your company can:

  • Accept card payments, simplifying the buying process and attracting new customers
  • Increase sales—and business growth—by allowing more transaction types
  • Make purchasing convenient for customers by enabling them to pay their preferred way
  • Improve cash flow forecasting and management
  • Avoid the risks associated with other payment methods, like bounced checks
  • Set up recurring payments for regular services

In addition to card transaction processing, merchant account providers offer several other services, such as technology integrations and business services. To maintain a merchant account, your business may have to pay a fee to cover the transaction costs from payment processors, the issuing bank and the credit card association.


Fees and Costs Associated with Merchant Services

Like many other business services, using merchant services to accept card payments comes with some fees. It’s critical to understand what these fees are for to ensure these services are helping your business instead of draining your revenue.

Merchant service fees can be structured as a per-transaction rate or a monthly or annual service fee. The service provider charges fees for card payments because the issuing and acquiring banks take on the financial liability of the transaction. If the customer is late with their credit card bill—or doesn’t ever pay—the issuing bank will be out of that payment. Banks typically assume the burden for fraudulent transactions.

The fees you will be charged depend on factors like:

  • The type of business you have according to the merchant category code
  • Your company’s credit rating and history
  • Whether the card was present (for retail in person) or not present (e.g., over the phone, internet or mail order)
  • How risky your business is
  • Card swipes versus key-entered card numbers

Pricing Models

The most common pricing models merchant service providers charge are:

  • Flat rate: With a flat-rate fee, the merchant service provider charges a fixed fee for all card transactions, regardless of the card used. This rate can be structured as a base rate or a base rate with a per-transaction fee.
  • Tiered rate: Tiered processors charge a fee based on the card type, the risk the transaction carries and the transaction volume for your business.
  • Direct interchange pricing: With a direct interchange fee, the merchant service provider charges a monthly fee not based on a percentage.
  • Interchange-plus pricing: In the most common pricing model, you, the merchant, are charged the interchange rate when a customer uses a payment card. This rate is calculated as a percentage of the transaction amount. You will also pay a fixed per-transaction fee.

Each of these pricing models has its caveats, such as:

  • Inconvenient for small businesses: Direct interchange fees and tiered rates are challenging for small- and medium-sized businesses (SMBs) with low sales volumes (whereas a flat rate system is ideal)
  • Cut taken from sales: The interchange plus rate varies by the credit card issuer, and the processor takes a portion of each sale.
  • Not ideal for business-to-customer transactions: Since tiered rates fluctuate, they may not be suitable for business-to-customer transaction processing.

Other Fees

Some other fees a merchant service provider may charge include:

  • Account setup fees
  • Minimum processing fees
  • Early termination fees
  • Nonsufficient funds fees (NSF)
  • Chargeback fees
  • Account fees
  • Statement fees
  • Cancellation fees


What To Consider When Choosing a Merchant Service Provider

Your transaction revenue supports your business, so you need a merchant service provider to help you grow your company. Asking these questions will help you select the right one:

  • Do their offerings match my business needs? Since each merchant service provider has different offerings, choose one that best aligns with your business needs and goals, now and in the future.
  • Which payment options do they support? Offering a variety of payment options improves the customer experience. See whether the merchant service provider supports payment processing solutions like mobile payments, contactless payments and ACH.
  • What fees and costs do they charge? Ask the merchant service provider about their pricing model to decide whether your budget is compatible. Understanding what your company pays for merchant services will help you partner with a cost-effective provider.
  • What customer support do they offer? Technical difficulties are likely to happen at some point. A knowledgeable customer support team helps you troubleshoot them as quickly as possible. Identify the level of support included in the contract and whether you will need to pay additional support costs.
  • What protection do they provide? Your business should be protected from payment security issues like credit card fraud. Ask the merchant provider if their systems support PCI compliance and what insurance they offer to cover security issues.
  • Do they have other services? Some providers offer additional services like loyalty programs, employee management solutions and cash advances. Find out whether your merchant service provider offers these services, and consider whether they will benefit your business now or in the future.


Choose CSG Forte as Your Merchant Service Provider

Now that you know what to look for in a merchant service provider, look no further for the ideal one—CSG Forte. For over 20 years, we’ve been offering industry-leading payment solutions that can help you accept payments quickly and grow your business.

We partner with several software providers to enable secure and quick payment processing for all merchants. Our solutions scale with your company to meet your changing needs while simplifying the payment process. With our payments platform, you’ll do more than just accept card transactions and ACH payments. You’ll manage every facet of these transactions with ease, from reconciling funds to running reports.

Sign up today to get comprehensive, reliable merchant services for your business. Want to learn more about what CSG Forte can do for you? Explore our merchant resources.

4 Reasons You Need a Scalable Payment Platform

Payment platforms are often rigorously designed for a number of factors, including security, speed, reliability, and more – but one of the most integral factors for any payment platform isn’t what you may think – it’s scalability.


What is a Scalable Payment Platform?

What makes a platform scalable is its ability to handle oncoming work that grows and develops. Similar to flexibility, scalability allows users from either end of the platform to transform and change their businesses with the knowledge that the platform will react accordingly, adjusting quickly to maneuver new challenges.

A platform that is not scalable, on the other hand, will suffer. Static platforms fizzle and die, unable to keep up with the growing trends and industry challenges. Look, for example, at the mobile payments industry. The highly scalable applications like Starbucks find themselves responding quickly and adeptly to consumer wants and needs. Mobile pre-ordering, built-in rewards, music applications, and payments are all part of that ever-changing platform – and it doesn’t seem likely that Starbucks will stop anytime soon.

On the other hand, a great number of other mobile applications lay in waste. Unable to accommodate user demands and requests, these platforms failed to drive forward. As a result, they lost users and sales. The platform dies.

Payments platforms, in particular, are specifically sensitive to scalability because of the nature of the payments industry. With ever-expanding challenges and disruptions, platform creators are now required to do more than troubleshoot. They are almost asked to intuit the new big wave, creating solutions before problems occur.

But such is the life for any tech industry, including fin tech.


Why Your Business Needs a Scalable Payment Platform

Payment platforms that cannot scale risk losing users on either side of the platform. Here’s why merchants and other users should consider scalability on their list when shopping for a payment platform.

Plan for business to grow

As a merchant, your aim is for business to grow, not shrink. Your payment platform should be able to adjust with you. As you increase volume, you should be able to easily move into higher processing levels without much issue. Be sure that your processor can accommodate changes in volume and speak to them about potential contract savings, as well. Many processors offer discounts the more you process.

Expect high functionality

The platform should not be disrupted no matter how little or how much you are processing. You should still be able to perform all of the functions you need regardless of your business size. There’s no reason any of the features you’ve been using at one level cannot translate to another.

Lower risk when business changes

Scalable platforms are more than just flexible. Because they can adapt, if you need to make changes because of a hardship or short-term change, a scalable system is going to help you adjust through this time period. In lieu of terminating contracts or being forced to switch processors, which is a lengthy and arduous process, a scalable platform will allow you to tighten the reins momentarily without much cost.

Increased opportunity for newer features

Scalable platforms are usually more likely to receive system updates and changes as trends come, which increases your opportunity to test out newer features as they are making waves. Static platforms are less inclined to update frequently and most likely will not adopt newer technologies. If you’re interested in the new and shiny, a scalable solution gives you a better opportunity, and it’s much easier to test out than transferring everything to an all-new system or processor.


Choose CSG Forte For Scalable Payment Solutions

Scalability is one of the most important features for payment platforms, landing high on the list for merchant shoppers. CSG Forte offers a scalable platform that adapts to changing business and takes both cards and eChecks. For more information, visit www.forte.net or call 866.290.5400.