Recurring ACH Payments | Definition | Costs | Methods

Recurring ACH payments have been around for a long time to handle payroll, bills, and subscriptions, but it’s by no means an outdated method. In this article, we’ll be looking at what recurring ACH payments are, their costs, and ways to send and receive them. We'll also talk about how Wise Business may satisfy your recurring ACH payment needs and help you save along the way.

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What are recurring ACH payments?

ACH (Automated Clearing House) payments are an electronic money transfer method that sends money from one bank account to another. Recurring ones are like a payment plan that goes through an automated system, transferring a certain amount of money to the same place on a regular schedule. Rather than having to pay bills, charge customers, or handle employee payroll using manual methods, recurring ACH payments reduce the admin work and time spent dealing with these payments.

While this method was previously only available for domestic transfers in the US, developments led to the creation of ‘global ACH.’ This lets people move money from US accounts to foreign bank accounts, allowing for more efficient international transactions. The only issue is that they’re not exactly widely available—but we’ll discuss a better method to handle international payments, much quicker, cheaper, and more efficiently, later on.

Note that ACH payments aren’t the same as wire transfers. They might sound similar, but the wire transfers are real-time, individual transfers, while ACH transactions are all processed in batches. That does mean ACH payments take a few days to go through (but it won’t matter if you schedule them properly), while wire transfers typically happen on the same day. The downside to wire transfers that make ACH payments more attractive is that they’re very expensive.

What are the benefits of recurring ACH payments?

Once you set up recurring ACH payments, you can reap a host of benefits, including:

• Convenience – The ACH payment setup is one and done for each recipient, which means you don’t have to set calendar reminders to pay on time.
• Better management of cash flow – When payments are made on a regular and expected schedule, you can manage your cash flow better and enjoy more predictability with your finances.
• Cost-efficiency – Compared to credit card payments, paper checks, and wire transfers, ACH payments won’t cost you those traditionally high fees.
• Reduced errors and delays – Human errors and late payments can be costly and frustrating, but automation and digital processing will make sure transactions are accurate and on time.

What are automatic ACH payments?

Although all ACH payments are automatic, not all automatic ACH payments are always recurring. If you’re dealing with a one-time client or charging a customer for something just once, those classify as one-time automatic ACH payments. For example, if you’ve left your car at a mechanic for a car repair, you might have authorized the company to automatically withdraw the money from your bank account once the repair is complete.

Costs of Recurring ACH Payments

As mentioned, there can be significant cost benefits to using recurring ACH payments, especially if you’re used to losing out on fees through credit card payments or similar.

Domestic Recurring ACH Payments

ACH transfers are often free to receive and send, although some financial institutions could charge up to $3 per payment.¹

International Recurring ACH Payments

International ACH payments can cost a bit more per payment, as there will be things like currency conversion and extra fees to worry about. The base fee for international ACH usually still costs less than $5, but currency conversion is typically unfavorable to customers of traditional banks.²

Ways to Send and Receive ACH Payments

There isn’t just one way to send and receive ACH payments, giving you the opportunity to weigh your options based on convenience and cost. Let’s go over a few you might want to consider.

Wise Business for ACH Payments

Wise is an international money transfer service that allows for low-cost ACH payments in various currencies. It's a great option for businesses with global clients or suppliers.

Wise allows users to send and receive ACH payments. They will generate a quote based on how much you intend to send or receive for their fees, which are usually minimal and very up-front.

Sound amazing? See for yourself how much time and hassle you can save. You can also schedule payments as needed.

Looking to make or receive payments internationally? Learn more below.

To minimize the impact of fees and unfavorable conversion rates, you can use a payment service provider such as Wise. With Wise Business, you’ll be able to set up scheduled transfers that will make international payments a breeze.

US Standard Banks

Traditional banks are usually valued for their comprehensive financial services. If you’re already a customer at a specific bank, it will feel a lot more convenient to use their ACH payment services too. While you can set up recurring ACH transfers at a branch, most online or mobile banking platforms will offer the tools to do it on your own. Sending an ACH payment requires you to have the recipient’s bank account details and for you to input the amount and schedule the transfer. To receive them, the payer will need your bank account information so they can initiate deposits into your account.

Banks will offer the security and reliability that make larger transfers less daunting, and ACH payments will integrate with the other financial accounts and services you might already use. The downsides, though, include the potential markups and fees and limited business-specific features. If you have international recipients, keep in mind that not all banks will offer cross-border capabilities.

Online Banks

Standard banks can provide digital setup of ACH payments, but online banks have the unique approach of handling the entire process digitally. They’ve likely streamlined every aspect of the process to ensure that their clients can set up and manage recurring ACH transactions online without intervention needed from the bank themselves. However, if you prefer the in-person support and customer service that traditional banks provide, online banks might not match up.

Credit Unions

People often opt to use credit unions because they boast a stronger local focus and provide better rates and lower fees to their customers. They usually provide the community-focused service of traditional banks, all while offering an intuitive experience for setting up recurring ACH payments. Although these benefits are certainly appealing, keep in mind that credit unions might not have access to the same resources as larger online banks or standard banks. For businesses looking to conduct both domestic and international ACH payments, remember that credit unions may have geographic limitations.

QuickBooks

For QuickBooks users, the platform lets you process ACH bank transfers from an invoice or customer sales receipt—as long as you have explicit permission. Through QuickBooks Payments, you can offer autopay for recurring invoices to customers to make payment much smoother. They won’t need to remember to pay you, and you won’t need to hassle them for the money. All you have to do is enter your customer’s bank information and then print an authorization paper for them to fill out and sign. According to QuickBooks, manual ACH payments can go through delays because of the extra security checks, but pay-enabled (automatic) invoices can help reduce those risks.³ Especially if you already use QuickBooks to run your business and handle your finances, integrating recurring ACH payments for invoicing, payroll, and other payments can be an easy addition.

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Sources:

1. Nerdwallet - ACH Transfers

2. US Bank - Wire or International ACH

3. QuickBooks - Process ACH Bank Transfer