Your Guide to POS Debit and Point of Sale Charges

When you accept particular types of credit or debit card payments, your business and customers need an easy way to distinguish different types of transactions to separate the real ones from fraudulent ones. This is where merchant descriptors come in. Merchant descriptions explain various transaction types on a customer’s bank account or credit card statements.

Two common descriptors are point of sale (POS) and POS debits. Learning the difference between various descriptors will allow your business to make accurate and easy-to-understand descriptors for various transactions customers make.

 

What Is POS Debit?

A transaction appears as a POS debit in a customer’s account when individuals use a debit card to purchase merchandise at a cash register or other point of sale using a personal identification number (PIN). This transaction differs from a direct benefit transfer (DBT) because those transactions don’t require a PIN entry. DBT often appears for transactions like contactless payment or e-commerce situations.

When customers make purchases, the transaction posts to their account immediately, though it may process at the end of a business day or later.

 

POS vs. POS Debit

Though the terms POS and POS debit may seem interchangeable, they have distinct meanings.

POS Meaning

In general, POS refers to the point of sale. A POS transaction is any transaction where a customer uses a card to purchase an item at a store’s point of sale, including a cash register or similar payment area at the front of a store. It may also include online sources. Payment methods in this category consist of several types, from debit and credit cards to gift cards.

POS Debit Meaning

POS debits are a more specific category within point-of-sale transactions. A transaction appearing as a POS debit in a customer’s account means that a customer used a debit card at a cash register with the PIN.

Transactions with debit cards have consistently risen in popularity in the decades since this payment method’s adoption. Today, these cards account for about 55% of noncash transactions. This popularity means businesses and customers need a reliable and transparent way to record these payments. One way is through a POS debit classification.

 

Debit Card vs. Credit Card Transactions

Although the physical process of paying with a debit card is quite similar to that of a credit card, these payment types have several differences that create a need for different descriptors in your system.

Where the Money Comes From

With a debit card transaction, the money comes directly from a customer’s checking account. When customers pay with credit cards, the money comes from a credit card network, and the customer will pay the card association back later for charges incurred.

Risk Involved

The risk involved is a significant reason for the distinction between the two payment types. Credit cards have higher fees because customers are using credit to complete the transaction, as opposed to money they have available in their checking account. Different classifications ensure that merchants pay the proper fees for each credit or debit card transaction.

Card Issuer

Debit cards come from banks where customers have checking accounts. Usually, the card falls under a central issuer, like Mastercard or Visa. These larger issuers typically offer credit cards too. Most people access credit cards through either their financial institution or directly from an issuer.

 

How Do Merchant Descriptors Work?

Merchant descriptors appear on bank or credit card statements to inform customers about their transactions. Customers know these descriptors as the bank statement description. There are three types of descriptors:

Static

These descriptors never change and are also known as default or hard descriptors. Your business will likely set this descriptor once and leave it as is. Whether a customer pays with a debit card, mobile payment or credit card, they will see the same descriptor.

Dynamic

This descriptor will change depending on the purchase method and other factors. This category includes POS debit and POS transactions. Some payment processors also allow for changes based on the type of purchase made, like a particular service.

Soft

These descriptors often appear in a different portion of a customer’s bank account after a customer authorizes a transaction but before it settles. In many cases, it looks the same as the static descriptor. In some cases, it may appear under the payment service provider’s name instead of the merchant name, confusing customers.

 

Best Practices for Merchant Descriptors

Merchant descriptors inform customers about the purchases they make so they can determine whether any may be fraudulent. Customers who cannot identify a transaction’s origin from the descriptor might dispute the charges, even when they are legitimate, costing your business money. This situation is known as a chargeback or friendly fraud and causes significant losses for businesses.

To avoid confusion, you can follow a few standard practices for displaying transactions on a bank statement:

• Set up your payment system: When you get a new payment system for the first time, establish understandable descriptors from the beginning. If you have had the same processing system for some time, go back and ensure descriptors make sense.
• Include the necessary information: Make your business easily identifiable by including a shortened name, state and ZIP code. You could also add a phone number or a URL.
• Think of the customer: You may want to set descriptors that work well for your payment processing needs. Instead, determine what would be most useful for the customer to know.
• Shorten the information: Most bank or credit card statements only display about 20 to 30 characters. Ensure you fit all necessary information in that count and test different banks or credit card companies to see how each shows your description.

 

Protecting Your Business With Reconciliation

Your business likely manages many transactions daily. Like your customers, you want to ensure that the amounts your POS system records match those recorded by your bank. POS transactions appear in your accounts with merchant descriptors in the same way they do for customers. Here’s how you can reconcile them:

1. Review sales and refunds in your POS system.
2. Compare this list to bank statements to check for differences.
3. Identify transactions that don’t match.
4. Contact your bank to resolve any issues.

Depending on the number of transactions you handle, you might perform reconciliations as often as every day to as little as once a month.

 

Choose CSG Forte for Payment Processing

Whether you handle POS transactions online or in person, CSG Forte’s payment processing system provides confident purchase management for customers and businesses. Learn more about how our reliable payment solution lets you accept point-of-sale transactions and maintain logical merchant descriptors for debits and other payment types. Get even more information about our solutions when you get started today.

Check Verification Guide for Businesses

Ensuring your business receives payments on time from customers is paramount to business operations. Whether your business deals with checks, eChecks or both, verification procedures can confirm that the payment is valid before you accept it. Check fraud is a prevalent problem for both consumers and businesses, resulting in significant losses.

Fortunately, verification procedures or systems can lower the chances that your business will experience payment fraud. Businesses can employ manual verification techniques but using an electronic process can provide automatic confirmation without requiring a time-consuming phone call or bank visit for every check.

 

What Is Check Verification?

Check verification confirms that a customer’s check and bank account are valid before transaction completion. This process ensures that payments will process as expected without waiting days to see whether funds clear in your account.

Verification procedures cover in-person and online transactions using checks and eChecks. With a developed process in place, you can secure your business profits and potentially prevent fraud.

 

Why Is Verification Necessary?

Electronic and paper checks comprise a significant portion of payment methods, with checks accounting for 14.5 billion payments and Automated Clearing House (ACH) debits for 16.6 billion. As these payment methods are still common, they are often a target for fraud. It’s recommended that businesses employ verification procedures because they can:

• Protect against losses: Confirmation lets you spot fraud before a customer leaves without paying for your products or services.
• Decrease returned checks: Ensure that customers have enough money in their accounts to cover the costs before you accept payment.
• Prevent payment evasion: With immediate verification, you can confirm whether a check will clear before you deposit it into your account, meaning you can verify payment before giving customers a product or service.

 

How to Verify a Check

Businesses looking to verify funds on a check may turn to several methods. The most basic way is by calling the customer’s financial institution. This process includes:

1. Inspect the check’s front to determine which financial institution issued it.
2. Search for the bank’s official website and a customer service number online. Don’t use the customer service number printed on a check, as it could be fraudulent.
3. Call the online service number and say you wish to verify a payment received.
4. Provide the account and routing numbers listed on the front of the check. These numbers are typically along the bottom, with the routing number first and the account number second.
5. Give the dollar amount written on the check.

Once you provide this information, the bank can confirm whether the check is valid. Depending on the bank’s security rules, the customer service representative may only state that the account exists, not the amount in the customer’s account. Other banks may verify a check’s funds, the account number and issuer and whether the account is active.

Some banks deny phone confirmation to protect customer privacy. In these cases, you must visit the nearest bank branch in person. You can also go to your bank, but the customer’s bank will give you a faster answer and more secure information.

Signs of Fraud

While your best course of action is to confirm validity with a bank or online fraud detection service, you can also look for warning signs like:

• Suspicious behavior: Actions like requesting cash for a check often indicate fraud.
• Check’s appearance: Authentic check backs include security features like a complicated pattern and the text “original document.”
• Microprint: Check backs also have tiny words printed in their design that often appear as solid lines or dots when they don’t come from a bank.

Businesses that frequently accept checks should set rules to reduce the chances of payments bouncing or fraud. These regulations might include requiring employees to report signs of fraud or keeping a business record of customers with previously rejected checks.

eCheck Verification

Electronic checks are created and sent to businesses online. As such, they have a different verification process. Procedures like calling a bank may not be necessary because eChecks process faster than physical checks, usually within 24 to 48 hours. Customers who use eChecks have less time to remove funds from their accounts, which would cause a check to bounce.

eCheck processing services often have built-in securities as well. The processor will verify a check online so you don’t need to. eChecks are also encrypted to keep information safe when sent online. These checks are much more challenging to steal and use fraudulently.

 

Sources for Check Verification

Sources for verification include:

• Your business bank: Your company’s bank can contact a customer’s bank to confirm the check information.
• A customer’s bank: The bank name is listed on the front of the check.
• Third-party services: These methods usually consist of an online service that confirms information based on check data.

You may verify checks using any of these options or a combination of them, but whichever you use, ensure it is legitimate. For example, don’t use a customer service number printed on a check. Instead, find the correct number on the bank’s website.

If your business uses merchant services, your service provider may include verification services or link you to another party that does. When you work with CSG Forte as your merchant payment processor, you can get merchant payment services from us.

Is Live Check Verification Secure?

As long as you use a legitimate form of live verification, it is very secure. Immediate payment confirmation offers a higher level of security than waiting for checks to clear because you receive approval or denial within minutes.

 

The CSG Forte Check Verification Process

With CSG Forte payment processing systems, you can choose between three verification methods: Validate, Validate+ and Authenticate. With each of these options, your business can automatically authorize checks and electronic funds transfer (EFT) payments using the routing and account numbers provided. Our Validate+ and Authenticate services offer an added layers of security features.

Things We Look for

Our procedure consults proprietary databases to check for suspicious information, including:

• Bad routing numbers: The routing number is invalid or goes to a different location than it should.
• Invalid checksums: The sum on the check doesn’t match bank records.

This service also verifies that the account exists and is open and valid. Payments that do not receive a definitive response move on to a national negative check database, which includes a comprehensive list of people who have previously written a bad check or one that bounced.

Based on the data received during our information search, the system will send a message indicating whether the payment was accepted. High-risk or insufficient funds checks receive an automatic decline. Others are accepted but may face further verification for your business’s safety. With Validate+, you can configure which results should lead to an approval or decline for added control over payment processing. When using CSG Forte’s Authenticate service, businesses are also able to verify account ownership, reducing the risk of fraud even further.

 

Choose CSG Forte for Online Check Verification

Online check verification ensures your business gets the promised funds for a product or service. With immediate confirmation, your business gains peace of mind when processing checks and electronic payments. Learn more about how our Validate service from CSG Forte processes all ACH payments, including eChecks, and provides immediate denial or approval to protect your business. Discover how to get started today.

eCheck vs. ACH What Is the Difference?

Many terms exist to describe types of automatic payments and it can be hard to understand what they all mean. At a high level, the broadest category is electronic funds transfer (EFT). Automated Clearing House (ACH) payments and eChecks are two examples that fit under EFTs. eChecks and ACH are two terms often used interchangeably. However, they have distinct differences. ACH transactions include various forms such as payroll and interest, while eChecks refer only to electronic transactions completed between checking accounts.

 

What is an Electronic Check or eCheck?

An eCheck is a type of ACH payment that involves transferring money between two checking accounts. This payment method goes by several other names, including electronic check, direct debit and internet check. Many businesses incorporate eChecks into their systems to accept large amounts of money. Companies that operate solely online also benefit from eChecks because they offer customers an additional payment option for transferring funds.

eChecks function much like paper checks but have an advantage because they do not become outdated. They also process faster because they skip the manual deposit process of sending a check and waiting to bring it to a bank. Typically, eChecks process in 24 to 48 hours. Customers also get more security through eChecks than they would with traditional payment methods, making them an appealing option for those sending and receiving funds.

It’s important to note that a business must work with a processing company to use electronic check ACH transfers. eChecks require particular software for safe and effective use.

 

How Do Electronic Checks (eChecks) Work?

Unlike a regular paper check, a business making an eCheck payment doesn’t write or print information onto a piece of paper. Instead, the payer enters all information electronically from one account to the other. Typically, the payee will send an online form where customers enter their checking account information and the amount paid. Payees can also accept eChecks over the phone with recorded phone calls. This process can save time and reduce paper use, creating positive environmental effects.

Another important note is that merchants must pay a small fee to process eChecks. The price is minimal and often worth the cost due to the added convenience and savings gained by not having to print and mail paper checks.

Other potential benefits for businesses when accepting eChecks include:

• Convenience: Depositing checks at the bank can be time-consuming for customers and businesses. The use of eChecks makes it easier to facilitate transactions without requiring extensive work for administrative staff. Additionally, eChecks often clear much faster than traditional checks, allowing businesses to access funds faster.
• Cost-effectiveness: eChecks generally have lower transaction fees compared to credit card payments, making them ideal for high transactions. Due to several features implemented by the ACH network, customers who use eChecks may also be less likely to initiate chargebacks compared to transactions with credit card companies. Fewer chargebacks can help businesses avoid potential lost revenue.
• Improved cash management: Fewer administrative obstacles and faster processing times contribute to better insights into funds, particularly for businesses with tight operating margins. Quicker access to funds can help facilitate better decision-making about expenses.
• Increased customer satisfaction: Businesses that offer multiple forms of payment can access a broader range of customer preferences. Accepting eChecks can make businesses more appealing to customers looking for flexibility and ease of payment.

How eCheck Processing Works

Businesses desiring to implement eCheck processing may want a more in-depth look at how the process works. Here’s a step-by-step explanation:

1. Reach out for authorization: All ACH payments, including eChecks, require approval from both parties by sending a signed order form, speaking on the phone or filling out an electronic form.
2. Enter payment information online: To begin processing information, you must enter customer information, including the bank’s routing number, account number, name, address and federal tax identification number.
3. Confirm and submit: After filling out all necessary fields, your business should ensure all information is correct and confirm submission through the software or payment gateway.
4. Initiate transfer: Submitting the payment details to the ACH network triggers the transfer of funds and coordinates with the bank for verification and movement of money.
5. Bank verification: Once the payer’s bank receives the account information and confirms the availability of funds, they will approve the transaction for processing.
6. Process payment: Once you submit a payment and the transaction is approved, the payer’s account will automatically withdraw the amount within three to five days.
7. Receive confirmation: When the transaction is complete, both parties generally receive confirmation receipts that show the check amount and other details.
8. Record keeping: The electronic process means the parties receive electronic records, which are often easier to manage and retrieve for accounting or auditing purposes.
9. Settlement: The process is officially complete once the ACH settles the transaction with both banks.

What Is ACH Processing?

eChecks are a type of ACH payment but not the only kind that exists. Broadly, ACH refers to the Automated Clearing House, a federal EFT system run by the National Automated Clearing House Association (Nacha). The network moves money directly between banks for ease and security in transferring money. Consumers, businesses and governments use this funds transfer method.

ACH processing has two main categories—credits and debits—so you can send money to customers or request that customers pay you. Here are a few primary uses for ACH transactions:

• Refunds (including taxes)
• Interest payments
• Government benefits
• Payroll
• Employee expense reimbursement
• Mortgages
• Financing
• Direct deposits

ACH payments offer a range of advantages over other payment methods, including:

• Low transaction costs: ACH payments charge a per transaction fee, no matter the payment amount, which is significantly more affordable compared to some traditional payment methods like credit cards, wire transfers, checks or cash.
• Secure payments: ACH processing provides secure payments by facilitating direct transactions between the payer and payee without any interference from a third party. This process can help reduce the chances of fraud or payment errors like misused credit card information, cash theft or bounced checks.
• Repeatable and reversible transactions: Some electronic payment methods require customer bank account information at each transaction. ACH offers recurring payments and automated transactions for customers and businesses, helping to reduce missed payments, save time and keep private information secure. ACH payments are also reversible, which can reduce the risk of fraud.

How Does ACH Processing Work?

The ACH network connects thousands of banks and other financial institutions across the United States. When a business or individual pays or requests payment, the request gets batched with other transactions. Here’s an example of the process for ACH direct payment:

1. Receive authorization: Before your business can bill a customer, you must receive permission through an authorization form that allows you to pull money from the customer’s bank account.
2. Information collection: Next, your business must provide details about the transaction to your bank, including routing numbers, bank account information and transaction type. The depository institution in the ACH network is known as the Originating Depository Financial Institution (ODFI).
3. Collecting and batching: The ODFI collects all transaction files and forwards them to be processed. During processing, the Federal Reserve or a clearinghouse receives the batch of transactions.
4. Receiving and distribution: The institution sorts them to determine which bank the payment must come from and which bank receives it, known as the Receiving Depository Financial Institution (RDFI). The recipient’s bank account gets the transaction and reconciles both accounts, which completes the transfer process.

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eChecks vs ACH: Breaking Down the Differences  

eChecks are a specialized form of ACH transaction, so these two electronic payment types have many similarities. Both are processed electronically, use the same network for processing and require authorization before making or receiving a transfer. They also have the same transaction limit.

Though eChecks and ACH have many similarities, comparing electronic checks vs. ACH brings out a few differences, including:

• Payment time: Both electronic transfer types take about four business days to process. However, those receiving eChecks may at times wait up to five days to receive the money.
• Technology used: eChecks were not available when the ACH was first created. This payment type was added to the system after new technology was developed and requires using an eCheck service.
• Payment uses: eChecks are more specialized than ACH transactions, usually for one-time expenses. This means the banking information is not stored once the transaction is complete. ACH covers recurring costs that occur on a schedule and stores the payment information for future deductions.
• Cost per transaction: ACH and eCheck transactions typically charge fees based on a percentage of the total transaction, but the fees charged for eChecks are often much lower. ACH payments may present chargeback, reversal or return fees in some cases. Both payment types have lower costs to process than credit card transactions.

Choosing a Payment Method Between eCheck and ACH

ACH payments and eChecks offer affordability, speed and security, making them appealing money movement options for merchants and customers. You can refer to the difference between eCheck and ACH these payment types to decide which is best for your business’ needs.

For example, a recurring expense like payroll is better handled through ACH than an eCheck. Payments from customers to your business might work better with an eCheck. Companies that see benefits in both types of transactions can often get them together since they use the same system.

How Can CSG Forte Help You Process eChecks and ACH Payments 

eChecks are a secure, fast and convenient way to receive payment from customers, but you need a processor that accepts this payment type. CSG Forte offers a payments platform that accepts eChecks, ACH transactions and credit and debit cards on a single platform. Our system integrates with existing ones and can be customized to meet changing business needs.

 

Contact one of our payment experts to learn more about how our complete payments solution can benefit you. You can also explore ways to get started with our solutions.

How Can You Benefit From Using ACH Withdrawals?

ACH withdrawals are a modern payment method that can be useful to both businesses and consumers. This approach to transferring funds offers benefits over other payment methods like checks and credit cards, and it’s supported by most major banks. Explore the meaning of ACH withdrawals, what makes them convenient, and why you might benefit from using this payment method moving forward.

 

What Is an ACH Withdrawal?

An ACH withdrawal transfers funds electronically through the Automated Clearing House (ACH) network. The ACH network acts as an intermediary between two financial institutions involved in the transaction. There are two parties that participate in ACH withdrawals—the Originating Depository Financial Institute (ODFI) and Receiving Depository Financial Institute (RDFI).

In any type of ACH transaction, the ODFI is the account that initiates the transaction. In the case of an ACH withdrawal, the ODFI requests funds from the RDFI. For example, a gym might request a monthly ACH withdrawal from every member to cover their membership fees.

 

How Does an ACH Withdrawal Work?

An ACH withdrawal starts with approval from two financial institutions to permit the exchange of funds. The two financial institutions can be two different banks, as long as they both support ACH transfers.

The ACH network then acts as the overseeing body for the transfer. One financial institution and account owner request a withdrawal, and the ACH network communicates the withdrawal to the other institution responsible for fulfilling the request. With the ACH network acting as a neutral third party in the exchange, all information stays secure and the financial request gets handled fairly.

 

ACH Credit vs. ACH Debit

ACH payments generally fall into two categories—credit and debit. ACH withdrawals are ACH debits because the process is initiated by the payee. The payee sends the request to the ACH network, and the RDFI responds to the transaction by sending the amount owed.

For ACH credits, the payer initiates the transaction. Direct deposit payments from employers are an example. The transaction is initiated with a payment from the employer, rather than a request for funds initiating the transaction. ACH credits may also occur with tax refunds and government benefits.

 

ACH Withdrawal Between Businesses and Customers

The ACH withdrawal process is straightforward and involves a few key steps between a business and a customer:

1. Request and initiation: A customer requests a product or service from a business and elects to pay by ACH transfer. In doing so, they authorize the transfer by providing their account and routing number for the transaction. This information will either go to the merchant directly or to the merchant’s third-party payment processor.
2. Request to bank: After the customer has authorized the transaction, the merchant or payment processor sends the withdrawal request to the merchant’s financial institution with the customer’s account information.
3. Request to ACH: The ODFI, the merchant’s bank, sends the request to the ACH network for processing.
4. Processing: During the processing stage, the ACH operator handling the request will sort all received transactions and direct them to the correct RDFIs.
5. Completion: The RDFI receives the request for the withdrawal and sends the amount to the ODFI. The withdrawal process is complete.

 

What Are the Advantages of ACH Withdrawals?

Using ACH withdrawals to complete transactions is beneficial for various reasons.

Convenience

Initiating the ACH withdrawal process is easy to do and comes with minimal administrative responsibilities. While paper checks come with constant cashing and tracking, ACH withdrawals are completely electronic. ACH payments are particularly convenient for subscription services and bills that need to be paid every month. Rather than receiving thousands of checks a month, you can manage all of your incoming payments directly with your bank account.

Cost

While ACH withdrawals can come with a small fee, they’re still much lower than wire transfers and credit card transaction fees. You can learn more about ACH fees by talking with your bank or financial institution. Some institutions may not charge a fee, especially for bill payments.

Efficiency

ACH payments will typically credit to an account within one to three business days, so you can have access to your new funds quickly. Once you initiate a transaction, the money is on track to your account—no need to handle additional steps like making a trip to the bank.

Security

Compared to cash and paper checks, ACH withdrawals are far more secure. Checks can get lost in the mail and clearly display account and routing numbers that any person can intercept. Cash can also be easily stolen and can be difficult to recover.

ACH withdrawals are overseen by the ACH network to ensure the safety of fund transfers. While the involved financial institutions do have to provide account information to complete the exchange, this information is only exchanged once. With one to three days of processing, you also have the time to cancel a transaction if fraud is suspected.

 

Banking Details Required for an ACH Withdrawal

When completing an ACH transaction, you’ll need the following information:

• The sender’s name
• Name of the financial institution
• Account type
• Routing number
• Account number

 

How CSG Forte Can Help You With ACH Withdrawals and Payments

CSG Forte’s Dex is a payments platform that makes it easy to conduct ACH withdrawals for your business. Manage all fund transfers in a single location, and access user-friendly reports that detail all payment activity. Reduce administrative strain on your team and provide convenient payment options online, in-person and on the phone.

CSG Forte supports a range of industries with our payment solution. Get started today by making an account or contact us to learn more.

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 and Processing

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 Processing 

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.

What Do ACH Credits Mean & How Do They Work?

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 the meaning of an ACH credit and how it can boost your business.

 

What Is ACH Credit and What Does It Mean?

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.

 

What Are The Benefits of ACH Credits For Your Business?

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.

What Are ACH Return Fees & How Do They Work?

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 Return Charges?

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 Return Charges?

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.

 

Codes to Know for Common ACH Return Fees

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. Returned mobile ACH payments are common in this case.
• 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.

 

What Are 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.

 

How to Dispute ACH Returns and Charges 

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. The same-day ACH cutoff time tends to be around 3:00 pm, so we recommend submitting 30 minutes to an hour before then.

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.