Use Recurring Payments to Predict Your Revenue Stream

As subscription models become more popular, recurring payments are as well. A recurring payment is a regular payment for a product or service. They benefit your customers by improving their experience and are great for your company by providing a steady revenue source.

 

What Is Recurring Payment Processing?

Recurring payments are automatic charges for a product or service used regularly. The customer agrees to have their card charged automatically according to the merchant’s payment schedule. Charges are made weekly, monthly, annually or whenever the customer’s subscription needs to be renewed.

Recurring charges are divided into two types based on the amount owed:

1. Fixed recurring payment: The customer is charged the same amount every pay period, regardless of usage.
2. Variable recurring payment: The customer is charged a different amount every pay period based on usage.

A company needs a payment service provider and merchant account to accept and process these payments.

Recurring payment solutions incur some costs. A recurring payment system charges a flat monthly fee and a percentage of your transaction volume. Costs will also vary based on the capabilities you need and the credit card issuer.

 

How Do Recurring Payments Work?

A recurring payment model takes several steps to set up:

1. The customer enrolls in a recurring payment option: The customer signs up for a subscription or opts to have their credit card charged automatically based on the payment schedule.
2. The customer chooses a payment method: The customer decides which payment mode to use for their recurring payment, such as a credit or debit card.
3. The customer agrees to the terms and conditions: Recurring payment systems must be approved by the customer. When customers accept the terms and conditions, they consent to the system storing their card details and charging their account every pay period.
4. The payment details are stored: The customer provides their card details, which the payment gateway stores for further transactions.
5. The payment is processed: The customer’s credit card network and issuing bank and the merchant’s acquiring bank approve the transaction, and money transfers from the customer to the merchant account.
6. The customer’s card is charged every period: When the next payment is due, the customer will be charged the amount owed based on the card details on file. The customer will get an invoice beforehand and a payment receipt once the transaction is complete.

Once this process is complete, your business can accept recurring payments from customers and receive payments within a few business days. The payment process repeats automatically every billing cycle, only stopping if the customer stops recurring payments or ends their subscription, or if the payment details are incorrect.

 

Businesses That Use Recurring Payments

Recurring payments used to be exclusive to a small sector of products and services. Now, many businesses are implementing a subscription model and allowing customers to make recurring payments. Any company offering products or services that customers frequently need can implement a subscription service.

Invoice-based recurring payment systems are ideal for:

• Subscription services and club sales: Recurring payments can pay the service fee every period, so the customer can keep participating in the service. Examples include streaming services and magazines.
• Membership services: Companies that run invoices for services can automate payments every billing cycle. Examples of these businesses include fitness clubs, tutoring companies and dance studios.
• Service providers: Service providers are businesses that service a customer at regular intervals and charge based on time. Examples include child care, lawn care and house cleaning.
• Government and municipal services: Government organizations can take advantage of recurring payments to ensure citizens pay their taxes on time.
• Services with payment plans: Companies that charge a high-cost service often allow customers to make scheduled payments over months. These smaller payments add up to the total service cost. Recurring payments can help customers make their monthly payments.

Recurring payments for online businesses can be used for:

• Online services: Many online services charge their customers for access to their products. Examples include mobile apps, virtual service providers and Software as a Service (SaaS).
• Subscription boxes: Subscription box companies sell subscriptions to their packages online. Subscribers enroll in the service and can be charged every period before the box is shipped to them.
• Restricted content services: Some companies make special content for paid subscribers only. Recurring membership payments can help ensure those who pay for the content can access it.
• Online learning: Online schools can charge their students every payment period for access to courses and instructional materials.

 

Benefits of Accepting Recurring Payments

Businesses that implement a recurring payment solution experience several benefits. They can:

• Have a predictable revenue stream: Subscription service payments make it easy to get predictable and stable revenue every pay period. With ad-hoc billing, your revenue is inconsistent since some customers may neglect paying their bill.
• Offer several payment options: Your customers can choose from various payment methods and schedules that work for them. Being this flexible without recurring payments is more difficult to manage.
• Simplify their workflow: Recurring payments automatically process invoices and payments, so your team will have less work to do every billing cycle.
• Enhance the customer experience: Recurring payments are convenient for your customers. They can set up their payment details and let the service charges pay for themselves without doing anything manually. By paying consistently, your customers will enjoy continuous service.
• Increase customer retention: Recurring payments encourage customers to continue to use your product or service, improving customer loyalty.
• Reduce the risk of fraud: Since the payment gateway stores the customer’s payment details, the risk of fraud is reduced.

 

How CSG Forte Helps With Recurring Payment Solutions

A payment gateway is one of many ways to process a recurring payment. Payment gateways are part of the recurring payment process by storing the customer’s card details for future charges. Companies can work with a payment gateway to support transactions.

Accept and process recurring payments with the payments platform by CSG Forte. With this platform, you can schedule recurring payments with your customers and manage these payments through account verification, returns management and more. You’ll also benefit from high gateway availability and minimal downtime with our enhanced payment gateway performance.

Contact CSG Forte for more information, or sign up for your recurring payment system today.

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.

What is ACH Credit and How Does It Work?

A Guide to ACH Credit

Do you compensate your employees through direct deposit? Have you paid your bills online? If so, you have sent ACH credit. The Automated Clearing House (ACH) is a critical network in the United States financial industry that manages millions of transactions like these every day.

ACH credit makes electronic money transfers possible, so many systems and apps use this infrastructure for digital payments. You can benefit from fast, simple and secure payments when your business uses ACH payment solutions.

Read our guide to understand what ACH credit means and how it can boost your business.

 

What Is ACH Credit?

An ACH credit is an electronic payment that sends money from one account to another. The payer (the person sending the payment) makes the request to push funds from the originating bank account (the payer’s account) to the recipient (the person receiving the payment) by putting the funds in the deposit account (the recipient’s account).

This method requires only a few basic transaction details, including the payer’s and recipient’s:

• Name
• Bank account number
• Bank routing number

In just a few hours or days, the transaction is completed, and the recipient has the funds in their account.

ACH credits occur through ACH, an electronic money network connecting every major financial institution in the country, including credit unions, banks and the Federal Reserve. With this network, people and businesses can facilitate payments between accounts regardless of the banking institution. The National Automated Clearing House Association (Nacha) manages the ACH network and ensures payment is safely and quickly transferred. While this network mainly transfers money within the U.S., it can be used for international transfers.

 

How Does ACH Credit Work?

ACH credits are essentially a digital form of paper checks. With a paper check, the payer would fill out a check for the recipient to take to their bank. With credit ACH, the details are recorded and the funds are transferred electronically.

Here is how ACH electronic credits work:

1. The payer initiates the payment: The payer provides the originating bank—or the Originating Depository Financial Institution (ODFI)—with the recipient’s account number and routing number, the amount of money to transfer, and a target settlement date (the date to transfer the money).
2. The ODFI sends the payment details to ACH: The ODFI or their approved processing partner starts the transfer by sending the request to the ACH network. These institutions may batch several transactions to send to ACH in bulk.
3. ACH sends the details to the recipient’s bank: The ACH network receives incoming transfer details in bulk and breaks them down into individual transactions. They bundle the transactions into batches and send the batch to the depositing bank—or the Receiving Depository Financial Institution (RDFI). ACH completes this process five times per business day.
4. The RDFI processes the transaction: The RDFI receives the ACH bundles in their system and executes the transaction based on the processing window. Any transactions with incorrect information will trigger an error code, and the RDFI sends error codes back to ACH.
5. The ODFI and RDFI settle the transaction: If the transaction has the correct details, the ODFI and RDFI settle the payment using their Federal Reserve balances.
6. The recipient receives the payment: The RDFI releases the ODFI funds to the deposit bank account.

This process typically takes two business days, but it can be completed in one day if the ODFI pays a fee for same-day processing.

 

Examples of ACH Credit

Many individuals and businesses use ACH credit every day without realizing it. Any payment involving an account number and routing number to transfer money counts as an ACH transfer.

The most common examples of ACH credits include:

• Online purchases: For merchants that do not accept credit card payments online, consumers can use an ACH transfer to pay the store for their order.
• Refunded purchases: When merchants need to refund a consumer for a returned product, they can push money from their account to the consumer’s account. This transaction is an ACH credit.
• Government benefits: The U.S. government uses ACH credit to send money from its accounts to qualified recipients for stimulus payments and similar transactions.
• Direct deposit: When employers send payroll to employees through direct deposits, these transfers are a type of ACH credit. Funds in the employer’s account are pushed to their employees’ bank accounts.
• Bill payments: Many companies allow customers to pay their bill online. Customers can provide their account and routing numbers to transfer funds from their account to the business to settle the bill.
• Peer-to-peer payments: Payment apps like Venmo and PayPal allow people to send money to another person. This transaction is an ACH credit payment.

 

ACH Credit Fees

While an ACH credit transaction is free, fees may be incurred depending on the bank used. If the ODFI or RDFI uses a processing partner, the partner may charge additional fees. The bank itself may charge a fee per transaction. The fee for an ACH credit transaction can range from tens of cents to a couple dollars.

Factors that impact ACH credit fees include:

• The number of transactions processed per month
• The monetary amount of transactions
• The likelihood the transaction will be returned
• If the transaction requires same-day processing
• Which account validation method will be used

Since these fees operate on a scale, businesses will see reduced costs per transaction the more transactions they have.

 

Advantages of Credit ACH for Businesses

Compared to traditional payment methods, ACH processing is quicker, easier and more secure. ACH transactions offer many advantages, including:

• Simple setup: ACH credit requires the payer’s and recipient’s bank account number and routing number. By requiring only a few details, your business can easily set up one-time or recurring payments. Because these numbers change infrequently, if ever, you can count on your payments to go through.
• Minimal to no transaction fees: Compared to wire transfers and credit cards, ACH credit fees are much lower, if there is a fee at all. This cost-effective fee pricing leads to monetary savings for your company.
• Fast payments: ACH credit is one of the most efficient payment methods available. You can pay your employees and bills right away without manual processing. Funds move quickly between banks and are available in the deposit account as soon as the transaction is finalized.
• Enhanced security: Credit ACH transactions have many security measures to ensure the funds are safe between the originating and deposit accounts. For example, bank account verification requires the payer and recipient to prove their bank account numbers, and fraud detection verifies the parties’ identities.
• Accessible payment records: You can review electronic records of your transactions in your ACH processing platform at any time.

 

Choose CSG Forte for ACH Payment Solutions

Your company can process ACH payments from any device, bank or source with validate services from CSG Forte. We offer two solutions—Validate and Validate+—to process and report your payments while reducing manual errors and identifying bad checks before processing. Your business can also validate online transactions for fraud, keeping you compliant with Nacha.

Contact us for more information about Validate and Validate+ or sign up today for your payment processing solution.

Navigating ACH Returns & Ensuring You Earn Your Expected Revenue

When handling transactions with Automated Clearing House (ACH) payments, awareness of ACH returns is a must. While these returns are not commonplace, it’s possible to experience them every now and then, especially if the bulk of your transactions are ACH payments.

ACH payments are electronic transfers regulated by the National Automated Clearing House Association (NACHA). These payments rely on the routing and account numbers of the sender and recipient to move funds from one account to another. These transactions process in one to three business days, and they often cost less to use than credit and debit or wire transfers.

In addition to payments to providers and merchants, ACH payments are often used for direct deposit from employers, recurring bill payments, business-to-supplier transactions and many other scenarios.

Standard and mobile ACH payments are a notable aspect of modern businesses. As a merchant or provider, receiving notice of an ACH return means you don’t receive the money you’re owed. Knowing what these returns are and how to respond ensures you earn your expected revenue.

 

What Are ACH Returns?

An ACH return occurs when the payment transaction fails to be completed. These failed transactions are referred to as “returns” because the money will return to the originator’s account, rather than transferring to the recipient. The merchant will never see the money in their account when an ACH return occurs.

An ACH return scenario starts with a standard ACH payment. A merchant will send a request to debit a client’s account, and the involved ACH network will receive the request. The network will then send the request to the client’s bank to fulfill the transaction. If all required conditions are met, the payment will go through.

In circumstances where the required conditions aren’t met, the client’s bank will alert the ACH network that they cannot complete the transaction. The money then stays in the client’s account—this is an ACH return.

ACH payments are a generally secure and reliable form of payment, and these returns likely only make up a small fraction of payments. However, understanding how they work can simplify the resolution process.

 

Important Terms for ACH Payments

When discussing ACH returns, it’s valuable to understand the different terms involved in the transaction. There are two parties affected by an ACH return:

• Originating Depository Financial Institution (ODFI): The ODFI is a financial institution that has agreed to request funds with an ACH operator. The operator will enter funds into the ACH on behalf of the ODFI. Most banks are ODFI-approved, meaning they approve ACH transfers. Other types of ODFIs can include payment gateways, payment processes and ACH payment APIs. In the case of an ACH return, the ODFI does not receive the money that is owed for a given transaction.
• Receiving Depository Financial Institution (RDFI): The RDFI is the bank being debited or credited in an ACH transaction, meaning they respond to an ACH payment. Just as most banks are ODFI-approved, many are also RDFI-approved. The RDFI alerts the ACH network when a transaction cannot be completed in an ACH return.

 

What Causes ACH Returns?

There are various reasons an ACH return might occur, and some are more common than others. On an RDFI’s end, an account may lack sufficient funds to cover the charge. Other times, the account may not be authorized to fulfill the transaction, or the payment information could be incorrect.

ACH payments don’t process in real time like credit or debit card transactions, so there is always a chance something could change between the time the ODFI requests a payment and the RDFI processes the transaction. ACH returns can come down to a small mistake, like a mistyped account number. Many times, these returns are simple to resolve with a phone call or two. More complex causes for these returns can involve revoking authorization, which may involve more time to resolve.

 

ACH Return Codes to Know

Understanding the reason for an ACH return is key to recovering the funds your company is owed. To make the resolution process possible, the ACH network provides return codes that signify the reasons for the failed transaction. Examples of return codes include:

• R01 Insufficient funds: If a client or consumer does not have enough money in their account, an ACH return will occur. This reason typically occurs when a customer has unknowingly overdrawn their account.
• R02 Account closed: In these cases, either the ODFI or RDFI closed the account for sending or receiving funds. If you know you haven’t closed your account, your client or customer has likely closed theirs.
• R03 No account: This reason differs slightly from R02. Rather than signifying that the account no longer exists, this code claims the account never did. R03 can also arise if the account’s owner is not the same as noted by the debit entry.
• R04 Invalid account number: You will receive the R04 return code if something is wrong with a client’s bank account number. R04 can also result in the account number not passing the validation process for completing the transaction.
• R05 Prenote not received: If the client has not authorized the use of ACH transfer when the RDFI submits a request, the R05 return code will apply.

There are more than five return codes, but these five are among the most common. Of these codes, R05 works differently from the other four. The return time frame for this code is 60 days instead of two days. This longer time frame exists so the originator has time to provide authorization before the ACH return becomes official.

Other return codes may involve the RDFI requesting a return, the client submitting a stop payment request, and other more complex scenarios. These codes are subject to evolve as ACH payments become more common.

 

What Happens if ACH Payments Are Returned?

If ACH payments are returned, you—as the merchant or provider—don’t receive the money you need for your product or service. Once you receive a return code for the transfer, you can move forward with the next steps.

In accordance with NACHA, the RDFI and ODFI are responsible for handling the resolution of these returns. While the provider and the client can contact each other directly to discuss the issue, the return cannot be undone until at least one of the involved financial institutions is contacted.

For example, if you receive the R02 return code, you can reach out to the client and ask them about their closed account. It’s possible the client switched banks and forgot they had an ACH arrangement with you. The client can then set up ACH payments with their new bank, and you can contact your bank to alert them of the change. Your bank can retract the debit request from your client’s old account and make arrangements for the new account.

Other return codes may involve direct discussions with your bank or the RDFI. An R04 return code may need further explanation as to why the account number did not pass the validation process. Getting more information from the financial institution can help you determine if you need to reach out to the client, or if there was an issue on your end.

Sometimes, you may also receive a Notice of Change (NOC) in addition to an ACH return. These two alerts are separate, but they’re not mutually exclusive. NOC occurs when a customer’s bank account information changes as a result of a merger, shift in the account or another reason. You might receive the R04 return code with a NOC where the RDFI will send updated account information for the ACH request.

NACHA compliance requires operations to keep their rate of ACH returns below 15%. For administrative returns—R02 to R04—the return rate must be 3% of transactions or lower. These percentages are notably larger than the practical percentages of returns, so managing this aspect of compliance shouldn’t be challenging.

 

ACH Return Fees

Return fees are similar to transaction fees. When a client or customer causes an ACH return, they will be charged anywhere from $2 to $5 in response to the return. This fee is similar to the cost that comes with a bounced check. Financial institutions charge these fees because it costs additional funds to process an ACH return.

 

Dispute ACH Returns

ACH returns can be disputed in certain circumstances. To qualify for a disputed return, your return must meet one of the following:

• The request was misrouted.
• The request was a duplicate.
• The information was incorrect.
• The transaction was not returned in the proper time frame.
• The receiver incurred unintended credit as a result.

With most ACH returns having a turnaround time of two days, these disputes must be handled efficiently. Returns that meet one of the five conditions must be sent in within five days of the return’s settlement date. Once the dispute has been received, the RDFI still has the ability to contest the dispute. If contesting occurs, the dispute is no longer an issue within the ACH network.

 

Streamline ACH Payments With CSG Forte

Payment operations can be complex. If you want to use ACH payments at your organization, simplify the process with CSG Forte’s Dex. Our payments platform automates all processes through a cloud-based solution. Save time managing administrative hurdles and cut down on the costs related to resolving problems.

Dex supports online, in-person and mobile ACH payments. Built-in account verifications, recurring payment capabilities and returns management make every process simple. We have experience working with small- and medium-sized businesses (SMBs), enterprises, government organizations and integrated software vendors.

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

Move Funds Faster With Same Day ACH Transfers

Automated clearing house (ACH) payments have become critical for everything from electronic bill payments to direct payroll deposits. Same-day ACH is one of the latest improvements to the ACH network that enables the processing of credit, debit and return transactions multiple times daily. Same-day ACH transfers ensure that payments are deposited into another account on the same day with absolute certainty.

Supporting over 98,000 merchants, CSG Forte is a leading payments provider of same-day ACH. We leverage decades of experience with best-in-class software to deliver a seamless and scalable solution to businesses operating in a comprehensive range of verticals, including healthcare, government, property management, insurance, utility companies and integrated software vendors.

 

What Is Same-Day ACH Transfer?

ACH utilizes a batch processing system to submit transactions multiple times per day. Financial institutions, businesses and consumers move money between accounts using ACH. Same-day ACH ensures your transfers go through on the same day you initiate them, as long as the initiating party executes them by a specific time.

Although it’s not a real-time payment method, ACH allows transfers to process faster than the several days it took years ago. Some of the key players in same-day ACH payments are the National Automated Clearing House Association (NACHA), receiving depository financial institutions (RDFIs), originating depository financial institutions (ODFIs) and third-party processors like CSG Forte.

In 2015, NACHA added windows that offer quicker same-day processing and settlements for ACH transactions due to consumer demand and continuous lobbying from industry experts. Before these changes, it usually took two to three business days to process a typical ACH transaction.

 

Benefits of Same-Day ACH Credits and Debits

Businesses that utilize ACH same-day services to move money between accounts experience benefits like:

• Optimized control of cash flow: Shortening the ACH processing window gives users faster access to their funds, often on the same day.
• Decreased cycling times: Same-day processing reduces the time it takes to deliver funds into a user’s account with automated processing.
• Higher transaction limits: Recent increases to same-day ACH limits enable businesses to complete more substantial transactions faster.
• Affordable transaction costs: Users can enjoy the advantages of quicker payments without the increased costs associated with credit cards and manual payment methods.
• Reduced outstanding payables: Same-day ACH options save time for your accounting department by minimizing the number of balances owed to you.

 

Primary Uses of Same-Day ACH

Businesses, financial institutions, government agencies and consumers that use same-day ACH transfers benefit from moving money between accounts faster. In the early days of ACH, consumer disbursements like payroll and insurance payouts represented the primary development. Today, much of the growth involves account-to-account transfers and bill payments for consumers and businesses.

Some of the most popular applications for same-day ACH transfers include:

• Same-day payrolls: These cases involve companies issuing payroll to workers through fast direct deposits while offering flexibility for missed deadlines, late payrolls and emergency distribution.
• Business-to-business payments: These transaction types provide quicker invoicing payment settlements between trading partners, including the remittance information.
• Expedited bill remittance: This category covers the ability to use ACH credits and payments that allow consumers to pay their bills on the due dates without penalty and offer faster crediting for late payments.
• Account-to-account transfer: These transactions provide faster crediting for consumers who move money between various personal accounts.
• Claims payments: These cases include quick payouts like disaster assistance and insurance claim payments, tax refunds and other types of reimbursements.

 

Same-Day ACH Transfer Cutoff Times and Transaction Limits

The cutoff time for submitting a same-day ACH transfer is 4:45 p.m. EST. Any transaction initiated after that time will not go through until the following business day. For example, if you execute a transfer after 5:00 p.m. on a Friday, it will post on the following Monday.

In March 2022, NACHA increased the individual transaction limit for all eligible same-day payments from $100,000 to $1 million. This update focused on various types of larger transactions, such as insurance claim payments, payroll funding and business-to-business tax payments.

Many financial institutions put limits on ACH transfers, primarily the number of daily and monthly transactions a user can execute. These limitations apply to incoming and outgoing transfers and often vary depending on the institution.

 

How CSG Forte Can Help Your Business

Same-day ACH payments are a crucial component of the modern payment landscape and a critical part of an effective digital payment strategy. At CSG Forte, transaction processing is the core of our payments platform solution. Our software makes it easy to manage all your ACH payments, including same-day transactions.

Our comprehensive approach to ACH allows businesses to disburse funds and collect remittances reliably and efficiently. Same-day ACH capabilities enable your company to turn customer payments into usable funds faster.

By using innovative and optimized solutions, our payments platform can change what was previously an operational expense into a revenue generator. Our solution streamlines ACH payments by validating transactions in real-time, keeping recurring payments on track and automatically reprocessing failed transactions.

 

Contact the Experts at CSG Forte Today

If you’re interested in learning more about ACH transactions and how same-day payments can optimize your business, the team at CSG Forte can help. Contact us online today to get started.

How Can Integrated Payments Improve Your Business?

Many of today’s rising businesses and entrepreneurs face challenges when processing their payments, primarily because they’re unaware of the various solutions available for choosing a payment model. Because payment technology constantly evolves, selecting a solution that offers the most advantages to your operation is critical.

Integrating payments with a reliable service provider lets you receive all the benefits of bringing payments in-house without structuring them yourself. CSG Forte can equip your company to accept a broad range of payment methods, regardless of how you choose to do business with your customers. Our cloud-based solutions allow you to manage all your payments in one place, whether from debit cards, credit cards, in-person purchases or ACH transactions.

 

What Is an Integrated Payment Solution?

Integrated payment solutions allow businesses to accept credit or debit card payments directly into their existing software platform. They can connect your payment systems with other critical aspects of your business, including your customer service management (CRM) program, payroll and accounting functions. One of the primary benefits of these solutions is that they minimize the number of steps required to manage your payments through automated accounting and recordkeeping.

Because the system posts payments for you, there’s no need to reconcile invoices or balance your general ledger later. Integrated payment solutions also work with banks to automatically process the incoming payment information.

 

Why Should Companies Switch to Integrated Payment Solutions?

Businesses that implement integrated payment solutions into their operations experience instant benefits, including:

• Security: Integrated payment solutions require fewer people to access your most sensitive financial data. They also eliminate manual entry, making them less susceptible to theft or interception. These systems also feature safeguards that make it more secure to store valuable data by using encryption to deter cybercriminals.
• Revenue optimization: Companies can complete transactions and process invoices instantly using integrated payment solutions. Receiving and posting payments faster means improved cash flow, allowing companies to maintain better relationships with customers, vendors and banks while improving profitability.
• Fewer errors: Calculation errors often lead to significant accounting problems and inaccuracies with revenue reporting. Integrated payment processing reduces these issues by eliminating double transactions and automatically relaying transaction information to the proper destination.
• Streamlined operations: With integrated payments solutions, businesses can improve efficiencies in their accounting processes, eliminating the need to enter and reconcile transaction data manually. The platform automatically posts payments at the time of the sale. It also displays transactions in real time, making accounting more manageable and accurate while providing immediate access to sales data.
• Improved customer experience: Efficient transactions are among the most significant customer concerns, as they often determine satisfaction levels and whether they may return for future business. Customers often leave a store when they encounter long lines or potential checkout problems. An integrated payment solution helps increase checkout times by eliminating many time-consuming factors associated with manual checkout.

 

Benefits of Partnering With CSG Forte

CSG Forte’s cloud-based solutions enable you to streamline payment management and increase your operational efficiency, including transaction monitoring, enhanced analysis and dispute management. Programs like Dex allow you to manage your payment operations in one location to save time and money. With increased visibility into your payment processes, you can perform tasks like canceling charges, granting refunds, changing payment methods and addressing other customer needs.

At CSG Forte, we aim to help our clients grow their businesses quickly, efficiently and profitably by offering superior payment platforms. We develop solutions that integrate seamlessly with your existing network by leveraging our world-class technology with decades of combined experience. We provide everything you need to accept and manage payments anytime or anywhere.

We also offer customer support options to fit your needs, from intuitive self-service to round-the-clock assistance.

 

Contact the Professionals at CSG Forte Today

CSG Forte partners with the world’s leading software providers to deliver the industry’s best business automation, payment processing and other business solutions. Let our experts show you the advantages our integrated payment solutions can offer your business. Connect with us online today to get started.

What Are eChecks and How Do They Work?

Five Questions About eCheck Payment Processing Answered

As the payments industry is becoming more digital, electronic payments are becoming the norm, and traditional payment methods are decreasing in use. Electronic checks—or eChecks—are an example of a new digital payment method.

An electronic check is a way to withdraw money from a checking account and deposit it into another digitally, with no paper required. In 2003, the Check Clearing for the 21st Century Act established the regulations for eCheck payment processing. As a result, eChecks are a quick, secure and convenient digital payment method.

In this blog, we answer the most common questions about eChecks. Review our answers to learn more about electronic checks, their benefits for your business and how you can start accepting eChecks today.

 

1. What Is an eCheck?

An eCheck is a digital check to make electronic payments from a checking account. Like a paper check, an eCheck requires basic information, but the information is collected and the transaction is processed electronically.

The electronic check payment withdraws money from a payer’s checking account, transfers the funds via the Automated Clearing House (ACH) network and makes an eCheck deposit in the payee’s checking account using a payment processor.

People can use eChecks to pay companies for bills. Businesses with an ACH merchant account can withdraw a customer’s payment directly from their bank account with the customer’s authorization.

eChecks are common for several types of payments—especially those that are high-cost—such as:

• Mortgage payments
• Rent
• Car loan payments
• Utility bills
• Fitness memberships
• Legal retainer fees
• Subscription fees

eChecks are most beneficial to these types of businesses:

• Businesses accepting large payments: For high-value payments, eChecks help you save money. eCheck processing involves fewer parties than credit card payments and avoids interchange fees.
• Online companies: Since online businesses already operate digitally, you can collect payment details online for eCheck payments.
• Subscription-based businesses: Since eChecks are a type of recurring payment, your customers can set up their account to send an eCheck on a repeating basis. Recurring eChecks are convenient for customers and your business. Customers will always pay their bill, so you’ll receive payment every period.

Other common names for eChecks include direct debit, online check and internet check.

 

2. How Does an eCheck Work?

An eCheck works like a paper check, except the information is transmitted electronically, making the process more efficient. eCheck payment requires these steps:

1. The customer starts a transaction: A customer authorizes an electronic money transfer by initiating an eCheck to a company for goods or services. A merchant must obtain permission from the customer through a contract, order form or similar method to withdraw money from their checking account.
2. The merchant collects the payment details: Once the merchant has the customer’s authorization, they can collect the details needed for the eCheck, such as the customer’s bank account number and routing number. Merchants can ask for this information via an online form, paper form or phone. For recurring payments, the customer and merchant must decide on a payment schedule.
3. The payment processor verifies the details: The merchant enters these details into their payment processing software. The merchant’s payment processor will validate the eCheck details to ensure the transaction is legitimate. Funds are verified 24 to 48 hours after the customer starts the transaction.
4. The merchant’s account receives the payment: After verification, the ACH network will process the eCheck. The funds will move from the customer’s account to the merchant’s account within three to five business days. Once paid, the customer will receive a payment receipt to confirm the eCheck has been deposited successfully.

 

3. How Are eChecks Different From Other Electronic Payment Methods?

The payment industry uses several terms for money transfers, and each term means something different. Payment types that are similar to, but not the same as, eChecks include:

• EFT: An electronic funds transfer (EFT) is a general term for electronic payments, such as eChecks, wire transfers and direct deposits.
• Paper check: A paper check is a slip of paper where customers write out payment details. They give this paper to the merchant, and the merchant uses the paper check to withdraw funds from the customer’s account. An eCheck is essentially a digital form of a paper check.
• ACH: ACH and eChecks both transfer funds between bank accounts. eChecks use the ACH network to make transfers and manage funds between the payer and payee accounts.
• Credit card: eChecks and credit cards both process electronic payments but in different ways. eChecks use the ACH network to transfer funds, have low processing fees and no credit card interchange fees. Credit cards use their own payment infrastructure to process payments, resulting in higher fees.
• Wire transfer: A wire transfer manually moves funds from one bank account to another. Wire transfers are more costly since they’re manual and less secure since payments cannot be revoked.

To understand these differences, you could say eChecks are a type of EFT that acts like a digital version of a paper check, using the ACH network to process payments quicker and cheaper than credit cards and wire transfers.

 

4. Are eChecks Secure?

Security is the primary advantage of eChecks over traditional payment methods because they are subject to Regulation E consumer protections. The security components of electronic check payments include:

• Authentication: Authentication verifies the identity of the individual submitting account information. This process makes sure that the merchant gets legitimate payment information, and the customer consents to have funds taken from their account.
• Digital signature: A digital signature is an encryption technique that uses timestamps to ensure eChecks cannot be duplicated.
• Duplicate detection: Duplicate detection monitors eCheck transactions for suspicious activity. This strategy can detect fraud, such as duplicated checks.
• Encryption: Encryption masks payment data to make it nonsensitive. Encrypted data is useless if stolen because the hacker must have the encryption key to decrypt the information. All ACH transactions like eChecks must be encrypted if they occur over unsecured electronic networks.
• Public key cryptography: This step is part of the encryption process. The key has the information needed to encrypt data during the transfer and cipher it at the receiving bank.
• Certificate authorities: The certificate authorities store, sign and issue a digital certificate to encrypt transactions, secure communication and protect information. They can certify the ownership of a public key. A Secure Sockets Layer (SSL) certificate is an example.

 

5. What Are the Benefits of eChecks?

eChecks offer several benefits for businesses and customers. Besides being a secure payment method, companies should take advantage of eChecks because they:

• Process quickly: eChecks take only three to five business days to finalize since the transaction is completed online. This timeline is much faster than paper checks, which can take more than a week due to verifying the payment details. With eChecks, you’ll get paid right away instead of waiting for your money.
• Increase revenue: Accepting eCheck payments can help your business make more money. Checking account numbers stay the same, whereas credit card numbers often change, so your payments will go through. eChecks can also be set up as a recurring payment, ensuring you get paid on time and eliminating the need to track down paper checks.
• Save money: eChecks have lower processing fees than credit cards. By accepting eChecks, your company can pay less in fees and get more money for your operations.
• Are easier to track: Hard copies of payment confirmations take up physical room in your office. With an eCheck, you and your customers will receive an email confirmation of payment, which you can store digitally.
• Cannot be lost or misplaced: An eCheck is a digital record, so it’s virtually impossible to lose. The banks and ACH network will keep track of the payment until it’s processed. Paper checks can be lost, requiring the payer to issue another check and stop the original check to prevent someone else from cashing it.
• Reduce waste: Since eChecks exist digitally, no paper is required. Your business can use less paper and reduce waste.

 

CSG Forte Can Help You Accept eChecks

Your company must have a payment processor to accept eChecks from your customers. Your business can start processing eChecks with CSG Forte, your trusted payments solution provider. Our payments platform allows merchants like you to accept eChecks as well as ACH payments and credit and debit cards.

What Are ACH Debits? ACH Debit Transactions Explained

Like many activities, financial transactions have gone digital. These electronic transactions occur primarily through an affiliated financial institution network called the Automated Clearing House (ACH) Network. This system helps move money between parties’ financial institutions simply, quickly and cost-effectively.

The National Automated Clearing House Association (NACHA) oversees the network and its transaction processing, amounting to billions of dollars moved annually. The governing organization establishes the rules and procedures for submitting and processing ACH debit and credit requests — the two main transaction categories.

In 2020 CSG Forte was named a Preferred Partner for Government Agency ACH Payment Gateways by Nacha. This is a designation given based on leadership and innovation in advancing the ACH network.

 

What Is an ACH Debit?

An ACH electronic debit is a transaction withdrawing money from an account electronically. ACH debits can pull funds from checking and savings accounts, though restrictions on debits may apply to some business accounts.

 

Identification

Whether the transaction classifies as an ACH debit depends on which party originates the request.

For each debit, there’s a corresponding ACH credit — funds received by the other party to the transaction. When you authorize a company or individual to withdraw funds from your account electronically, they initiate the request with the network. These qualify as ACH debits since they’re pulling money from — debiting — your account. The funds’ ultimate deposit into their account represents the transaction’s ACH credit portion.

 

Timing

While ACH debit payments and credits are swift, they’re not instantaneous. NACHA aggregates transactions and processes them in batches. Batches execute five times daily to facilitate efficient money transfers.

 

Advantages

ACH debits for business have numerous advantages, including:

• Cost control: ACH debit processing is generally more affordable than handling physical checks or even credit or debit card transactions.
• Better risk mitigation: Since fewer people are involved in processing, there’s less fraud and error risk.
• Faster payment collection: ACH debits provide cash flow sooner than traditional check processing.
• Improved recordkeeping: Completing payments with ACH debits creates electronic traces for easier tracking, reporting and reconciliation.
• Environmental friendliness: ACH debits reduce the need for paper checks and mail trucks that consume resources.
• Reversibility: ACH debits can be reversed when errors occur, unlike wire transfers, which are generally challenging to recapture.

 

Challenges

ACH debits can also pose some unique challenges, such as:

• Financial institution restrictions: Some account holders restrict ACH debits to transactional, daily, weekly or monthly limits.
• Limited funds availability insight: The ACH network doesn’t support immediate feedback on errors or guarantee funds availability.
• Real-time execution: The ACH network doesn’t provide instant credits, though it can significantly reduce processing time versus physical checks.

 

How Do ACH Debits Work?

ACH debits follow a prescribed multistep process.

1. The Payee Initiates the Request

The recipient submits a message to their account holder called the Originating Depository Financial Institution (ODFI), requesting it to debit the payer’s account using:

• The bank routing and account numbers of the account to debit.
• The transaction amount.
• The Standard Entry Class (SEC) code.
• A proposed transaction settlement date.

The ODFI then enters the request on the ACH network.

2. The Payer’s Account Holder Receives the Request

At regular intervals each business day, the ACH network passes these withdrawal requests to the payer’s account holder, the Receiving Depository Financial Institution (RDFI). The network bundles demand by institution, so the RFDI will get multiple debit requests with each “drop.” The RDFI investigates the requests and transmits any error messages or rejections to the ACH network.

3. The Transaction Settles

As long as there are no errors or rejections before the proposed settlement time, the ODFI and RDFI will transfer balances between each other through their respective Federal Reserve accounts. Once the ODFI receives the funds, it credits the payee’s account to finalize the transaction.

 

Main Types of ACH Debits

There are two primary categories of ACH debit transactions — recurring payments and one-time authorizations — before the activities receive additional standardized coding.

 

Recurring Payments

Establishing an automatic payment with a company gives it recurring authorization to initiate an ACH debit from your account information. For example, many consumers sign up for automatic payments on their wireless bills or streaming services. As the bill comes due each month, the provider uses the agreement to request the funds to satisfy the amount owed. This convenience ensures people don’t forget to pay and prevents late fees or service disruptions.

 

On-Demand ACH Transactions

One-time authorizations allow a receiving party to request the monies for a single transaction. They are also called on-demand ACH debits because they don’t represent an ongoing arrangement. An example is a consumer agreeing to an electronic debit from their account for a tax payment or individual purchase. Under this ACH debit type, consumers generally retain more control over when a business can electronically withdraw funds.

 

Standard Entry Class Identification

The ACH network recognizes numerous debit types beyond recurring and on-demand. Initiators can use a three-character SEC code to identify the precise type:

• Accounts receivable entry (ARC): This code represents converting checks from payment drop boxes or mail into one-time authorization to debit the payer’s account electronically.
• Back-office conversion (BOC): BOC transactions use a check presented in person to initiate an ACH debit after acceptance.
• Machine transfer entry (MTE): This code applies to automated teller machine (ATM) withdrawals to debit a bank account for the funds withdrawn from the machine.
• Point-of-purchase transaction (POP): Unlike BOC check conversions, POP transactions use physical checks immediately upon receipt and return the paper check to the presenter once the system accepts the debit.
• Point-of-sale entries (POS): POS transactions may be the most common, as they use your debit card to withdraw the corresponding funds from your account.
• Prearranged payment and deposit (PPD): Recipients use this code to originate recurring and automatic payments.
• Shared network entry (SHR): Much like the MTE, the SHR code settles ATM withdrawals for machines within the same network.
• Telephone-originated request (TEL): This SEC identifier applies to payment authorizations received in phone interactions.
• Web-initiated transaction (WEB): As its name suggests, WEB is reserved for ACH debits agreed upon through internet activity.

 

ACH Debit Versus ACH Credit

ACH credits differ slightly from ACH bank debits, though they generally represent two sides of the same transaction.

A transaction qualifies as an ACH credit when an account holder electronically sends money to another’s account, typically at a different financial institution. Since they’re depositing funds rather than withdrawing them, this action is also called a “push.”

The ODFI will enter the request with ACH, which passes the crediting information onto the RDFI. Settlements occur the same way as with ACH debit — as long as the information reconciles correctly, the RDFI accepts the funds and credits the recipient’s account.

Direct deposits, electronic refunds and peer-to-peer payments are all ACH credit transaction examples.

 

eChecks Versus ACH Debit

eChecks — short for electronic checks — can represent an ACH debit, but the term isn’t definitive. While eCheck can describe any portion of the digital money exchange, ACH debit applies specifically to cases where the recipient initiates the payment request.

Another key difference is whether the money transfers via ACH. eChecks can be used to support a wire transfer that occurs outside the ACH network. Almost all physical checks go through some electronic processing, but not all result in ACH debit and credit transactions.

 

Choose CSG Forte for ACH Debit Solutions

As an experienced NACHA Preferred Partner for payment solutions, CSG Forte leverages scalable, easy-to-use technology to simplify and streamline online payment collection.

Contact us to request a personalized quote, or apply for your account today.

Use Recurring Payments to Predict Your Revenue Stream

As subscription models become more popular, recurring payments are as well. A recurring payment is a regular payment for a product or service. They benefit your customers by improving their experience and are great for your company by providing a steady revenue source.

 

What Is Recurring Payment Processing?

Recurring payments are automatic charges for a product or service used regularly. The customer agrees to have their card charged automatically according to the merchant’s payment schedule. Charges are made weekly, monthly, annually or whenever the customer’s subscription needs to be renewed.

Recurring charges are divided into two types based on the amount owed:

1. Fixed recurring payment: The customer is charged the same amount every pay period, regardless of usage.
2. Variable recurring payment: The customer is charged a different amount every pay period based on usage.

A company needs a payment service provider and merchant account to accept and process these payments.

Recurring payment solutions incur some costs. A recurring payment system charges a flat monthly fee and a percentage of your transaction volume. Costs will also vary based on the capabilities you need and the credit card issuer.

 

How Do Recurring Payments Work?

A recurring payment model takes several steps to set up:

1. The customer enrolls in a recurring payment option: The customer signs up for a subscription or opts to have their credit card charged automatically based on the payment schedule.
2. The customer chooses a payment method: The customer decides which payment mode to use for their recurring payment, such as a credit or debit card.
3. The customer agrees to the terms and conditions: Recurring payment systems must be approved by the customer. When customers accept the terms and conditions, they consent to the system storing their card details and charging their account every pay period.
4. The payment details are stored: The customer provides their card details, which the payment gateway stores for further transactions.
5. The payment is processed: The customer’s credit card network and issuing bank and the merchant’s acquiring bank approve the transaction, and money transfers from the customer to the merchant account.
6. The customer’s card is charged every period: When the next payment is due, the customer will be charged the amount owed based on the card details on file. The customer will get an invoice beforehand and a payment receipt once the transaction is complete.

Once this process is complete, your business can accept recurring payments from customers and receive payments within a few business days. The payment process repeats automatically every billing cycle, only stopping if the customer stops recurring payments or ends their subscription, or if the payment details are incorrect.

 

Businesses That Use Recurring Payments

Recurring payments used to be exclusive to a small sector of products and services. Now, many businesses are implementing a subscription model and allowing customers to make recurring payments. Any company offering products or services that customers frequently need can implement a subscription service.

Invoice-based recurring payment systems are ideal for:

• Subscription services and club sales: Recurring payments can pay the service fee every period, so the customer can keep participating in the service. Examples include streaming services and magazines.
• Membership services: Companies that run invoices for services can automate payments every billing cycle. Examples of these businesses include fitness clubs, tutoring companies and dance studios.
• Service providers: Service providers are businesses that service a customer at regular intervals and charge based on time. Examples include child care, lawn care and house cleaning.
• Government and municipal services: Government organizations can take advantage of recurring payments to ensure citizens pay their taxes on time.
• Services with payment plans: Companies that charge a high-cost service often allow customers to make scheduled payments over months. These smaller payments add up to the total service cost. Recurring payments can help customers make their monthly payments.

Recurring payments for online businesses can be used for:

• Online services: Many online services charge their customers for access to their products. Examples include mobile apps, virtual service providers and Software as a Service (SaaS).
• Subscription boxes: Subscription box companies sell subscriptions to their packages online. Subscribers enroll in the service and can be charged every period before the box is shipped to them.
• Restricted content services: Some companies make special content for paid subscribers only. Recurring membership payments can help ensure those who pay for the content can access it.
• Online learning: Online schools can charge their students every payment period for access to courses and instructional materials.

 

Benefits of Accepting Recurring Payments

Businesses that implement a recurring payment solution experience several benefits. They can:

• Have a predictable revenue stream: Subscription service payments make it easy to get predictable and stable revenue every pay period. With ad-hoc billing, your revenue is inconsistent since some customers may neglect paying their bill.
• Offer several payment options: Your customers can choose from various payment methods and schedules that work for them. Being this flexible without recurring payments is more difficult to manage.
• Simplify their workflow: Recurring payments automatically process invoices and payments, so your team will have less work to do every billing cycle.
• Enhance the customer experience: Recurring payments are convenient for your customers. They can set up their payment details and let the service charges pay for themselves without doing anything manually. By paying consistently, your customers will enjoy continuous service.
• Increase customer retention: Recurring payments encourage customers to continue to use your product or service, improving customer loyalty.
• Reduce the risk of fraud: Since the payment gateway stores the customer’s payment details, the risk of fraud is reduced.

 

How CSG Forte Helps With Recurring Payment Solutions

A payment gateway is one of many ways to process a recurring payment. Payment gateways are part of the recurring payment process by storing the customer’s card details for future charges. Companies can work with a payment gateway to support transactions.

Accept and process recurring payments with the payments platform by CSG Forte. With this platform, you can schedule recurring payments with your customers and manage these payments through account verification, returns management and more. You’ll also benefit from high gateway availability and minimal downtime with our enhanced payment gateway performance.

Contact CSG Forte for more information, or sign up for your recurring payment system today.

How Can Businesses Use Real-Time Payments?

Although traditional payment options are still around, consumers and businesses want improved payment methods to send and receive money faster. Real-time payments are a solution that became available in the United States in 2017. This platform offers significant improvements, including payments that are transferred and settled almost instantly.

Since the real-time payment network is expected to grow domestically and internationally, businesses must understand what it is and how to leverage it to improve operations. Explore our guide for everything you need to know about real-time payments.

 

What Are Real-Time Payments?

A real-time payment is a near-instantaneous payment between two parties. Its name comes from the fact that initiating, clearing and settling a payment occurs in real time, taking only a matter of seconds to complete.

All real-time payments follow International Organization for Standardization (ISO) 20022, a global financial messaging and payment systems standard. Its consistent, data-rich messaging format allows real-time payments to process quickly, which reduces errors, prevents processing delays and enhances security.

Real-time transfers operate on an open-loop system, meaning payments are withdrawn from the payer’s account directly instead of relying on a prepaid balance.

The real-time payments rail is the network that makes these payments possible. The network processes orders 24/7 year-round, so you can send and receive real-time payments at any time.

The most prominent real-time payment network in the U.S. is the RTP network by The Clearing House. The Federal Reserve is due to launch another network called FedNow in 2023. Other countries, such as India, Japan, the United Kingdom and Brazil, have their own networks to support real-time transfers.

 

Faster Payments vs. Real-Time Payments

Though faster and real-time payments seem similar, these terms are distinct with key differences. Real-time payments are a form of faster payments, but not all faster payments are real-time payments.

Faster payment solutions are options that use an accelerated payment rail to post payments quicker than traditional payment rails but are not instantaneous. They are faster because they message transactions quickly but do not settle them in real time.

Examples of faster payments include:

• Same-day ACH payments by the National Automated Clearing House Association (Nacha)
• Peer-to-peer (P2P) payment apps like PayPal, Venmo and Zelle
• Debit push payments like those by Mastercard and Visa

Real-time payments are posted and settled in real time, so the payee can receive money almost instantly. Examples of real-time payments include the RTP network and FedNow.

 

Benefits of a Real-Time Transfer

Real-time payments offer several advantages, including:

• Almost-instantaneous credit: Real-time payments are one of the fastest options available, with payments received and settled almost instantly. The real-time payment network is also available outside standard business hours and on weekends and holidays. People and businesses can send payments anytime and receive money right away without waiting for the money to be credited to the account.
• Better liquidity management: For businesses, near-instant payments support their cash flow. Instead of funds locked in processing between accounts, funds are credited to the receiving account immediately. This factor is especially beneficial for small businesses with a smaller cash flow.
• Cost savings: Real-time transfers save businesses money because this method is more cost-effective than traditional payment options. Printing and mailing a paper check takes more time and risks printing errors that delay payment. Transactions that fail to post and need to be fixed manually can become costly. The real-time transfer network eliminates these drawbacks.
• Improved communication: With traditional payment methods, communication flows in one direction—from payer to payee—and any further communication about the payment has to happen outside the platform. As a result, issues with the payment can take longer to resolve. Real-time transfers allow both payer and payee to communicate, and quick payments improve payment efficiency.
• Irrefutable payments: Real-time payments are irrefutable or irrevocable. Once the payer sends money, they cannot take it back or reclaim it. This factor is important in business because they can send and receive payments on delivery of a product or service. Instant payments also make it more difficult for parties in a contract to go back on the agreed terms.

 

Merchants Using Real-Time Payments

In the business-to-business (B2B) market, banks, merchants and companies across industries recognize these benefits of real-time transfers. Customer demand for real-time payments has increased, and governments around the world support this payment solution. As a result, more and more businesses are using this network for their payments. The total real-time transactions in the U.S. reached 1.8 billion in 2021 and are expected to grow to 8.9 billion by 2026.

The retail and e-commerce industry accounted for 34.5% of global revenue from real-time payments in 2021, the biggest share of any market. The desire for quick payment settlements from merchants and the growth of mobile-based shopping have contributed to this growth. Banking, financial services and insurance will likely increase their share in the coming years as they work to adopt real-time transfer options for their customers.

 

How Businesses Use the Real-Time Network

As real-time payment adoption has increased, businesses have found ways to take advantage of the network for B2B transactions. P2P payment apps are integrated with the real-time payment network to make transfers nearly instantaneous. Companies can use this network on P2P apps to make B2B payments, which is easier and quicker than manual processes.

Companies can also use real-time payments for B2B uses like:

• Confirming payments
• Adjusting the timing of payments
• Managing liquid funds
• Paying bills
• Reviewing payment data

 

The Future of Real-Time Payments

Given that real-time payments are increasingly more adopted by businesses and expected by consumers, this payment method will continue to improve and become the norm for digital payments. In the U.S., the RTP network—and FedNow soon—will encourage developments in real-time payments and support more users and transactions.

As more companies and people use the real-time payment network, security will become increasingly important. Financial technology is a popular target for hackers, but appropriate safeguards can keep payments secure. Fraud detection software like behavioral analytics and machine learning identify fraudulent transactions. Some governments have mandated or are considering legislation for real-time payment security.

As the use of real-time payments becomes more popular, traditional payment methods like paper checks have decreased. Checks are common in B2B transactions, but their processing costs and timeline are prompting more companies to consider electronic payments. In consumer transactions, the use of paper checks has been diminishing for decades. A report from the Federal Reserve Bank of Atlanta found the number of checks consumers wrote decreased by 63%, from 19.3 billion in 2000 to 7.1 billion in 2015.

 

Choose the Real-Time Payments Platform From CSG Forte

Manage your company’s payments with Dex, the cloud-based payments platform from CSG Forte. You can unify all your company’s transactions onto one platform and use APIs to integrate its functionalities with your platforms. As a result, you can manage your entire transaction life cycle with:

• Simplified payment operations by managing transactions and disputes
• Informed customer insights backed by data
• Enhanced reporting and analytics
• Reduced payment platforms and logins

With Dex, you’ll have more time to spend on your business because our platform will monitor and manage your payment data for you. See how Dex works by scheduling a demo with our team. Sign up today for your payment platform solution.