MAG Insights

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MAG Sponsor Spotlight: ACH Coming of Age: Processing P-to-B Payments (MAG Quarterly- Volume Four, Issue One)



By Jimmy Williams, TeleCheck, First Data

March 3, 2016

Like other solutions in the payments industry, ACH continues to reinvent itself.  Originally introduced in the 1970s as a way to streamline payments normally made by paper check, ACH has become so much more.  Consider that, in the U.S. alone, more than 30 million people have a checking account but no card of any sort. No debit cards, no credit cards.  A huge number of individuals want to pay by check and the merchant that doesn’t accept checks or ACH solutions is missing an opportunity to cultivate loyal customers.

Today’s ACH products serve a number of purposes, allowing consumers to pay in the way that’s easiest for them, allowing merchants to support multiple payment types and predict how much transactions will cost, and avoiding the interchange fees common with credit and debit transactions.  Over the years, we’ve moved from classic check acceptance at the point of sale to enabling merchants to “empower” transactions that are ACH-based.  Consider that there are many situations where a paper check is never presented, but the bank account is utilized for the transaction.

Electronic check acceptance, for example, has been wildly popular with merchants wanting to move away from accepting paper checks at the point of sale.  We’ve seen many merchants convert from paper check to electronic check over the last decade or so.  Yet we did not see the same enthusiastic levels of adoption for internet sales. Several years ago, TeleCheck introduced a highly successful Internet Check Acceptance® (ICA) solution. Clients including an important online retailer turned to us to enable consumers to make ACH transactions over the internet. But ICA isn’t limited to the biggest retailers – it’s great for smaller online merchants as well. 

Everyone’s carrying a mobile device today and merchants need to be prepared to accept all types of digital wallets. With mobile check acceptance (MCA), the concept is simple: the retailer uses a phone or tablet to take a photo of the customer’s check. It’s deposited, and converted to an ACH transaction.  Clients who make field deliveries of goods to small businesses or clients who deliver on-site services are among those who rely on MCA to streamline the delivery process. A large national brewery, for example, delivers thousands of dollars of beverages to small bars and restaurants every day. Rather than asking the driver to manage an envelope of checks, this client now uses mobile check acceptance.  The restaurants receive their deliveries, the driver takes a photo of the check, which is converted to an ACH payment and funded the next day.  Merchants in every scenario can feel comfortable that taking a paper check is no longer a question mark; it’s money in the bank.

As consumers demand more from retailers, particularly loyalty and rewards programs, we have more clients looking for products like our ConnectPaySM solution, which allows merchants to give consumers the option to tie their bank account to the retailer’s loyalty program. Imagine visiting your neighborhood grocery, walking up to the cashier and as the cashier swipes your loyalty card, your payment information is ready to go in the system.  From a consumer perspective, the transaction is fast and easy. And the grocery continues to build a base of extremely happy, loyal customers.