Here, we’ll dive into the specifics of ACH fees. It’s important to understand how they work so you can plan accordingly. This is a necessary business expense if you want to process card payments, but there is power in knowledge.
What Are ACH Fees?
An ACH fee is a charge that appears on a merchant account statement for the processing of credit and debit card transactions through the Automated Clearing House. The fee is assessed for every transaction made with a credit or debit card. ACH fees may vary depending on your payment processor, your account agreement, your transaction volume, and a variety of other things.
ACH fees are charged to the merchant for the service of processing payments. In other words, the fees are designed to cover the costs of sending the transaction information between the issuing bank and the acquirer. They also cover the process of authorizing and declining payments based on the information gathered from the issuing bank when the transaction was initiated.
How Much Are ACH Fees?
As previously stated, ACH fees can vary based on a number of factors such as those listed below. While card networks often charge similar fees, payment processors are extremely different from one to the next.
- Transaction Volume
- Business Credit
- Personal Credit
- Business Type
- Business Risk Status
- Payment Processor
Any combination of these factors can generate different ACH fees for different merchants. When shopping for a payment processor, keep in mind that they will consider all the above when building out your fee schedule. We recommend shopping around to find the right fit for your business.
Typical ACH Processing Fees
- Transaction Fee
This fee is assessed on a per-transaction basis. Some transaction fees are expressed as a flat fee per ACH transfer while others are charged as a percentage of the purchase amount. Flat transaction fees can range from $0.20 – $1.50 depending on the processor and the transaction volume of your business. Percentage-based transaction fees typically range from 0.5% – 1.5% of the total transaction. If you’re a high-risk business, your processor may charge both!
- Monthly Fee
Monthly fees can differ from one processor to the next, as well. Some processors charge a monthly fee for access to ACH processing, while also charging per-transaction fees as described above. Other processors may offer monthly rates that are inclusive of all ACH transactions. Depending on your transaction volume, this could be good or bad for your business. Monthly fees can range from $5 – $30 per month, or more if you have a high transaction volume.
- Batch Fee
The batch fee is charged when transactions are batched for settlement. At the end of the day, merchants should batch and settle their transactions to ensure prompt exchange of funds between their customers and their business. A “batch” is when multiple payments are sent to different recipients at the same time, using one single payment. Most batch fees are below $1.00 per batch.
- ACH Return Fee
When an ACH transaction is returned, there is generally a penalty involved. This fee can range from $3.00 – $5.00 per returned transaction. Some merchants absorb this cost while others try to get the customer to pay the fee. Banks may also charge their cardholder a fee for returned transactions.
- ACH Reversal / Chargeback Fee
An ACH reversal or chargeback is one of the most expensive fees for a merchant. This happens when a customer calls their bank and disputes a charge as fraudulent or unauthorized. The bank will reverse the transaction, take the money from the merchant’s account, and put it back into the cardholder’s account. Sometimes this happens without the merchant’s knowledge, which makes it difficult to keep up with. These fees can cost anywhere from $5.00 – $25, depending on the processor and the issuing bank.
Who Pays ACH Fees?
ACH fees are paid to the processor by the merchant. Each month, the merchant receives a monthly statement that outlines all the transactions processed during the prior billing cycle, and what the associated fees were for each one. This is where it gets complicated for business owners to track their fees. However, it’s critical to review this information on a monthly basis. Knowing what your fees are and how they trend up and down can help you catch mistakes quickly and get them resolved.
How Can I Decrease ACH Fees?
You’ll never get rid of ACH fees, but there are some things you can do in your business to reduce their impact. You may be surprised at how much money you can save by following some of these simple steps.
Re-Negotiate Your Contract: If you’ve been a client for a while and your account is in good standing, your processor may be inclined to negotiate a little bit and come down on some of their fees.
Reduce the Risk of Fraud: The higher the risk for the merchant account issuer, the higher your fees will be. Take the time to put fraud detection and prevention protocols in place. This will help the bank feel more secure in doing business with you and may result in lower fees based on lower risk.
Be Sure Your Gateway and Terminal Are Setup Properly: When your payment processing service was implemented, there was a variety of information entered that could affect your fee structure. This information includes the type of business, type of transactions, and frequency of transactions.
Consult an Expert: When all else fails, consult an expert in payment processing to review your agreement, fee structure, and setup. They may be able to give you some helpful hints on reducing your ACH fees.