Welcome to a new era of vendor and employee payments

Employee payroll and expenses. Vendor services and supplies. Business taxes and fees. Years ago, owners would write checks from their business banking account to pay for all these things and more.

As you can imagine, this required a large volume of checks, stationery and stamps as well as countless hours to mail and coordinate everything. Not to mention the fraud risks that can be associated with paper checks.

ACH (short for Automatic Clearing House) Payment Services was created in the 1970s to provide faster, more convenient options, making it possible to transfer funds between bank accounts without paper checks. ACH Payment Services has evolved over the years. And businesses have responded.

Today, more businesses are using ACH payment options to electronically pay business expenses (ACH debits) and accept customer payments (ACH credits). That number continues to grow, with more than 30 billion ACH transactions processed in 2022 alone.

How businesses are using ACH

Finding more hours in the day

Early on, ACH payments were batched once a day. If you missed the deadline, your payment wouldn’t be submitted for processing until the next business day. On a weekend or holiday, it would take even longer.

This could disrupt a business’s cash flow and delay shipments from vendors waiting for payments to post. As the demand for secure, convenient, digitized payments continued to grow, so did the efficiency with which they could be processed.

In 2016, Nacha, the governing body for ACH payments, added a Same-day ACH delivery option for credits, and it expanded the rules to include debits one year later. 2017 also saw the launch of the Real-Time Payments network that is operated by The Clearing House as a way for merchants to receive their payments even faster.

Nacha has continued to improve the service of ACH payments. Submissions are now sent five times a day for Standard ACH and three times a day for Same-day ACH.

Keeping up with changing needs

As a business owner, you may sometimes need a payment to post to your account right away. Or you may be able to wait a day or two. That’s where having multiple delivery methods comes into play.

ACH credits can be settled in one of three ways, depending on your needs for that transaction: Standard ACH, Same-day ACH or real-time payment. However, ACH debits (money you pay out) will always post to the receiver’s account by 8:30 a.m. Eastern time the following banking day, or sooner if you use Same-day ACH or real-time payments.

Keep in mind that faster payments may come with additional fees, and not all banks offer Same-day and real-time processing. Chase for Business is one that does. Contact your bank to find out its ACH payment options and associated fees.

Raising transaction limits

In addition to having more submission windows during which to send transactions, businesses can now benefit from higher transaction limits.

This increase helps ensure that recipients get access to larger amounts faster — without having to wait because transactions exceed dollar limits.

Expanding payment options

ACH offers several payment options, depending on your business needs. Most banks charge a flat rate for a set number of transactions per month and an additional fee for any transactions over the limit.

If your number of transactions varies a lot from month to month, you may want to consider a pay-as-you-go option, now offered by some banks. As the name implies, this payment method charges merchants a fee for each transaction — with no monthly flat rate and no limits.

Going digital

ACH payments provide a convenient way to pay compared with paper checks, which can be lost or stolen and may need to be deposited in person. And now, with faster delivery options, new ways to pay and higher limits, these digital payment solutions can give your business even more flexibility and control.

For more information about ACH Payment Services and our pay-as-you-go plan, speak with a Chase Payments Advisor.

Standard ACH, Same-day ACH and Real-time payment transactions each count toward your total daily limits for transaction amounts.

Real-time payments: Your payment generally arrives moments after you send it. We review all payments before we process them, and we may require additional information which could cause some delay. If you use Chase dual control, we will begin to process your payment, once an authorized user approves it. Enrollment in ACH Payment Services is required to activate real-time payments. There is a fee of 1% of the payment amount, up to $25 per transaction for a real-time payment. Real-time payments are unavailable from 2-6 AM ET on business days and cannot be cancelled or reversed, once processing begins. Not all payees’ banks support real-time payments. Real-time payments use The Clearing House network to process payments and are not subject to Nacha rules and are not ACH transactions.

Same-day ACH payments: Your payment generally arrives by end of day, when authorized before the 2:00 PM ET cut-off. Most payments scheduled after the 2:00 PM Cut-off time will arrive the next business day by 1:00 PM ET. We review all payments before we process them, and we may require additional information which could cause some delay. If you use Chase dual control, we will begin to process your payment, once an authorized user approves it. Enrollment in ACH Payment Services is required. There is a fee of 1% of the payment amount, up to $25 per transaction for a Same-day ACH payment. Same-day ACH payment delivery is available during business days only. Final availability of the funds is subject to the recipient’s financial institution.  Same-day ACH payments are subject to Nacha rules.

Standard ACH allows you to send electronic payments to your vendors and employees. Standard ACH payments must be approved by 8:00 PM ET and arrival time is dependent on your payee type; payments to business accounts (vendor payees) as early as  1 business day and payments to personal accounts (employee payees) as early as 2 business days. Standard ACH payments authorized after the cutoff time will be processed the next business day. You can cancel a Standard ACH as long as you do so before the 8:00 PM ET cutoff time.  We review all payments before we process them, and we may require additional information which could cause some delay.  Standard ACH payments are subject to Nacha rules.

Additional information including transaction limits can be viewed in “Learn more” within the Business Payment Center.

For informational/educational purposes only: The views expressed in this article may differ from those of other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone and are not intended as specific advice/recommendation for any individual. Information has been obtained from sources believed to be reliable, but JPMorgan Chase & Co. or its affiliates and/or subsidiaries do not warrant its completeness or accuracy. You should carefully consider your needs and objectives before making any decisions and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.

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