The document compares ACH debit and ACH credit, two essential electronic payment methods for small businesses, highlighting their differences, processing times, and associated costs. ACH debit pulls money from one account, while ACH credit pushes money to another, with each type having distinct transaction mechanisms and purposes. The document also discusses the automated clearing house (ACH) network, the types of transactions involved, and how to choose the right ACH processor for businesses.

1. ACH DEBIT
v/s ACH
CREDIT
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2. ACH DEBIT v/s ACH CREDIT
2
Small businesses must provide their clients with various online payment choices.
Two of the most popular cashless payment methods, in addition to credit cards and e-wallets, are ACH credit and
ACH debit.
Over $72.6 trillion was sent and received via the ACH network in 2021.
That represents a 17.4% increase from the previous year. Because they are quick, secure, and have cheap
processing costs, businesses, especially subscription-based ones, are giving them priority.
ACH debit and credit both have distinct differences while being comparable. We'll highlight the most notable
variations in this article and define each payment form.
Additionally, we'll assist you in selecting the best option for your company.
This article explains various types of ACH services and what to look for in selecting the ACH processor. We'll also
briefly review the best payment processors for small businesses.

3. What is
ACH?
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4. 4
The Automated Clearing House, or ACH as its acronym knows it, is an electronic network that enables payments between
financial institutions in the United States.
Electronic financial transfers (EFTs) are ACH payments processors which transfers from one bank to another. Both parties
must utilize their respective bank accounts and routing numbers to start the payment over the ACH network.
ACH payments takes in three to six business days. It is the controlling body of the ACH Network. Each transaction is checked
to see if it complies with the National Automated Machine Clearing House Association (NACHA) criteria. Transactions that
don't comply with NACHA standards have their ACH return code rejected, and expressing the problem will reveal it.
What is ACH Debit?
A debit transaction using an ACH "pulls" money from one account. It transfers it to another, for instance, from a consumer's
personal account to a company or government account or vice versa.
Banks and their equivalents frequently submit batches of "push" and "pull" requests to the ACH network. After bundling them,
the network distributes them five times each working day. An ACH debit request is a request that asks that a particular
account be debited for a particular sum of money.
Every transfer necessitates the removal of money from one account or another, indicating that there will always be a debit on
one side. The person who requests the transaction decides whether or not it qualifies as an ACH debit.

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How does ACH Debit
Work?

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When money leaves your bank account, it is referred
to as an ACH debit. Due to the ACH network's ability
to set up periodic payments, ACH debits assist with
paying bills.
To start an ACH debit, you must send the network the
payment request. The recipient's and your accounts'
account information is required, but the ACH network
will take care of the rest automatically.
If you utilize ACH debits to pay your bills, be aware
that an ACH transfer might take one to five business
days, so you should make sure you pay enough in
advance to make the payment deadline.
Additionally, a minor cost for outgoing ACH
transactions may be assessd by some banks. You
should budget for these extra costs if you pay your
bills through ACH debits. Ask your bank whether there
are fees or a cap on the amount you can transfer via
ACH debits.

7. What is ACH
Credit?
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Push transactions are ACH credits. By doing this, the payer transfers
funds from their own bank account to the recipient. Suppose an
employer pays its staff by electronically depositing funds into their
checking accounts. The ACH credit includes withdrawals from payment
services like Venmo, government benefits, and refunds in addition to
paychecks.

8. How does ACH Credit
Work?
The money that arrives in your account is known as an ACH credit. As a result, the individual paying
you has always started the ACH credit process. For instance, the customer paying you would have
to start an ACH credit after receiving an invoice for products and services.
Push transactions are another name for ACH credits. This is because money is being transferred
from one bank account to another.
It's typical to see "pending ACH credit" shown on your bank statement to reflect a payment that a
client initiated but has not yet passed the ACH network because ACH credits take time to process
correctly.
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9. What's the difference between ACH
Debit and ACH Credit?
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10. The originator of an ACH Credit transaction asks for the money to be sent from their account to the recipient's
account.
This is frequently described as a "push." In an ACH debit transaction, the originator, or "pull," seeks to withdraw
funds to their own account from the recipient's account. The two transactions are the exact opposite of one
another.
Making bill payments online using a banking portal or sending peer-to-peer payments through an app are two
examples of consumer-initiated ACH credit transactions.
Although each business or governmental body usually serves as an originator in both debit and credit, making it a
debit or credit from their perspective.
It is an ACH credit if they send money to individuals through the ACH network. It is an ACH debit if they take
money for payment through the ACH network.
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11. What are the types of ACH debit?
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 Accounts Receivable Entry (ARC): Accounts Receivable Entry is the electronic processing of physical
checks received by mail or dropbox to generate an ACH debit transaction.
 Back Office Conversion (BOC) converts hand-delivered, physical checks from payers into electronic
funds transfers (ACH transactions).
 Machine Transfer Entry (MTE) deducts funds from bank accounts to cover ATM withdrawals.
 Point-of-Purchase Entry(POP): Here, the physical checks that the payer provided in person are
immediately transformed into an ACH transaction and then cancelled and returned.
 Point-of-Sale Entry (POS): A location where a customer purchases and pays any applicable sales
taxes.
 Pre-authorized bill payments deducted directly from bank accounts are referred to as Prearranged
Payment & Deposit Entry (PPD).
 Shared Network Transaction (SHR): An electronic terminal initiates this one-time debit entry to a
receiver's account.
 Telephone-Initiated Entry (TEL): In this case, transactions that were started over the phone result in
the debiting of bank accounts.
 Web-Initiated Entry: In this case, online transactions cause a debit to be made to the bank accounts.

12. How much do an ACH credit
and ACH debit transaction
cost?
• Rates for processing debit and online credit card processing payments may vary depending on how
the card was used—swiped, dipped (for chip cards), or manually entered in. These fees range from 10
to 30 cents for each transaction plus around 2.6 per cent to 3.5 per cent of the transaction amount.
•
For swiped and dipped debit and credit cards, Square's regular card processing costs are 2.6% of the
transaction amount plus 10 cents, or 3.5% + 15 cents for key-in cards.
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13. Thank you!
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