For small businesses looking for a reliable, low-cost way to accept payments, Automated Clearing House (ACH) transactions offer a powerful solution. ACH in banking refers to electronic transfers between bank accounts, providing a secure and efficient alternative to paper checks, wire transfers, or cash.
Because they move money directly between bank accounts, they often come with lower fees and reduce the hassle of manual processing. As one of the most cost-effective payment methods, ACH helps businesses streamline transactions while keeping more revenue in their pockets.
With ACH now available on GoDaddy’s Invoicing and Online Pay Links, small businesses can offer their customers an easy, low-cost way to pay directly from their bank accounts. This addition enhances the payment experience by reducing fees, streamlining cash flow, and making high-value transactions more seamless.
Level up your payment processing with GoDaddy Payments.
What is an ACH payment?
ACH payments are electronic bank-to-bank transfers processed through the Automated Clearing House (ACH) network. This network, overseen by NACHA, facilitates the secure movement of money between financial institutions across the U.S. only.
ACH in banking plays a crucial role in handling direct deposits, bill payments, and business transactions—offering a convenient, digital alternative to checks and wire transfers.
By integrating ACH into their payment options, businesses can tap into a widely used and trusted payment system—one that provides lower costs, enhanced security, and a seamless transaction experience.
Clarifying the meaning of ACH terms that you’ll see in banking
ACH transactions come in different forms, depending on whether money is being sent or received — each playing a key role in everyday banking and business payments.
ACH Deposit
An ACH deposit occurs when funds are electronically added to a bank account through the ACH network. For example, when an employer sends payroll via direct deposit, employees receive their wages directly into their bank accounts without needing a paper check.
ACH Payment
ACH payment involves funds being withdrawn or sent from a bank account. For example, paying a utility bill directly from your bank account is an ACH payment. Both processes use the ACH network to move funds electronically but operate in opposite directions.
ACH Debit
ACH debit transactions withdraw money from a bank account when authorized by the account holder. A common example is automatic monthly subscription payments, such as a streaming service deducting the fee from your bank account each month.
ACH Credit
ACH credit transactions push funds into a recipient’s account. A familiar example is when the IRS issues tax refunds directly to taxpayers’ bank accounts, ensuring fast and secure fund transfers.
Uses of ACH payments
ACH payments play a critical role in both business and personal finance, providing a seamless and cost-effective way to transfer funds electronically. Businesses rely on ACH for several key financial activities, making it a cornerstone of modern payment processing.
Customer payments
Businesses can accept ACH transfers for invoices, online purchases, and services.
Payroll management
With ACH via banking, businesses can send direct deposits to employees quickly and securely. Instead of issuing paper checks, companies can ensure workers are paid directly into their bank accounts on a scheduled basis at a lower cost.
Vendor payments
These help businesses pay suppliers, contractors, and service providers without relying on checks or costly wire transfers.
Bill payments
People everyday use payments via ACH for bill payments like mortgage, rent, and utilities, as well as fund transfers between personal bank accounts.
Because of its security, reliability, and affordability, ACH has become an integral part of financial transactions, allowing businesses and individuals to move money efficiently without incurring high fees or delays.
How ACH payments work
ACH payments typically take one to three business days to complete. The process begins when a business initiates a transaction through its bank or payment processor. The Originating Depository Financial Institution (ODFI)—the bank handling the transaction request—submits it to the ACH network, which is regulated by NACHA (National Automated Clearing House Association). The transaction is then routed to the Receiving Depository Financial Institution (RDFI)—the customer’s bank—where it is verified and the funds are either accepted or rejected.
For a smooth transaction, it’s crucial to have accurate bank account details, including routing and account numbers. Incorrect or outdated information can lead to payment failures or delays.
Because ACH payments are processed in scheduled batches rather than immediately, they offer a cost-effective and secure payment option while maintaining predictable settlement times. This makes ACH an excellent option for businesses handling high-value transactions or recurring billing cycles.
What are the benefits of ACH transfers?
Payments via ACH offer several advantages for businesses looking to reduce their costs of payment processing and streamline operations. One of the biggest benefits is lower costs compared to methods like wire transfers and checks.
While credit card processing fees often range from 2.5% to 3.5% per transaction, ACH fees are typically lower. Wire transfers, while faster, can cost between $25 and $50 per transfer — making them far less practical for routine business transactions.
ACH helps businesses reduce reliance on paper checks, cutting down on administrative work, mailing costs, and potential delays. It also reduces the headaches of check fraud and bounced checks. According to the 2022 AFP Payments Cost Benchmarking Survey, the median cost of issuing a paper check ranges from $2.01 to $4.00 vs. ACH payments, which cost about $0.40.
Beyond cost savings, ACH can improve cash flow management by providing businesses with predictable settlement times. When using GoDaddy as your commerce platform, you can track all ACH transactions on your Transactions page and in your Payouts report, ensuring better financial oversight.
ACH in banking also supports automation for recurring transactions, reducing manual effort for both businesses and customers. Customers can securely save their bank information for future payments, making it easier to set up subscriptions and repeat billing.
Finally, ACH payments enable you to offer your customers more ways to pay and the option to pay using their preferred payment method.
The best payment processing companies stand out with cost-effective ACH pricing. With 1% per transaction, or just 0.8% (capped at $10 per transaction) with the Invoicing & Pay Links Plus plan, GoDaddy provides one of the most affordable ACH payment solutions available—helping businesses save more while streamlining payments.
How to set up ACH transfers and accept payments
For businesses looking to accept ACH payments, the process is straightforward and offers significant cost savings. You can find out how to enable ACH bank transfer on your GoDaddy Payments account in our Help Article on the subject.
Security and fraud prevention
ACH payments are one of the most secure electronic payment methods available, thanks to strict NACHA regulations, encryption protocols, and authentication measures designed to protect against fraud and unauthorized access. Unlike paper checks, which can be lost, stolen, or altered, ACH transactions are processed digitally within a regulated framework that reduces exposure to fraud and errors.
Financial institutions and payment processors are required to use multi-factor authentication, data encryption, and fraud monitoring tools to safeguard ACH transactions. Additionally, NACHA mandates transaction verification protocols, ensuring that account details are valid before processing payments.
To further protect your business, it's important to monitor for red flags such as unusual transaction patterns, unexpected charge amounts, or multiple failed payment attempts. Businesses that detect any suspicious activity should work closely with their payment processor to address issues promptly and prevent fraudulent transactions.
Proactively identifying and responding to these risks helps ensure smooth ACH processing and financial security.
Processing times
ACH payments typically take three to five business days to process, depending on factors like the type of transfer and the processing schedules of the banks involved.
Because ACH payments are batch-processed rather than settled in real-time, transactions follow a set clearing schedule. However, same-day ACH options are available in some cases, allowing funds to move faster for an additional fee.
Limited international use
One key limitation of payment via ACH is that it’s primarily designed for transactions within the United States. Unlike wire transfers or global digital payment networks, ACH payments can’t be used to send or receive funds internationally. This can be a challenge for businesses with customers or vendors outside the U.S. who need flexible cross-border payment solutions. To accommodate your global customer base, offer multiple payment options that complement ACH.
Accelerate Your ACH payments with GoDaddy Invoicing and Pay Links
ACH bank transfers are available as a payment method on GoDaddy’s Invoicing and Online Pay Links products. With fees as low as 1% per transaction—or just 0.8% with a maximum of $10 per transaction on the Plus plan—GoDaddy helps businesses save significantly on payment processing costs.
Whether collecting customer payments online or managing vendor transactions, ACH enhances your customer’s checkout experience by simply offering more payment options.
Adopting ACH via GoDaddy Payments lets you leverage a low-cost, highly secure payment method that fits within a comprehensive commerce platform designed to simplify your transactions and maximize your revenue.
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