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What are the advantages of ACH payments and are they safe?

A small business owner using a laptop to send ACH payments to her vendors.
Alanna Caplin
Published at | Updated:

Check use has been in rapid decline for years, replaced by faster, safer, and more convenient digital payment options. 

ACH bank transfers amounted to $91.85 trillion in 2021, accounting for 72% of noncash payments value, according to the most recent data from the Federal Reserve.

What’s ACH?

ACH (Automated Clearing House) is a highly-vetted nationwide network that coordinates electronic payments and money transfers between bank accounts using the account and routing numbers. ACH is ideal for batched, automated, and recurring payments. For this reason, more businesses are opting for ACH as their preferred payment method.

Learn more about ACH payments.Check out our complete guide to ACH

Advantages of ACH Payments

Here are five reasons why it makes sense to use online ACH payments for your business.

Low cost

ACH payments are typically less expensive than checks, wire transfers, or credit card payments. The cost of writing a check is estimated at around $10 and domestic wires can cost anything from $15 to $30, while the median cost for sending or receiving ACH payments is $0.26-$0.5, and costs are further reduced if you have higher transaction volumes. 

Saves time

ACH payments can be scheduled in advance. This allows businesses to spend less time writing, sending, and tracking checks.  Additionally, vendor details only need to be registered once. After that, sending recurring payments is fast and easy.

Easier on your books

ACH makes it easier to keep track of income and expenses. With every payment recorded electronically, transaction history is more likely shareable across apps, and easily available for you and your accountant or bookkeeper.

Also, ACH payments make the reconciliation process simpler. Having all payments aggregated in a single location eliminates the headache of trying to connect paper invoices with checks.

Environmentally friendly

ACH payments completely eliminate the use of paper and ink, otherwise needed when printing checks, sending envelopes, and using stamps. It also reduces the carbon footprint associated with check delivery.


ACH payments go through a clearinghouse that enforces rules and regulations while keeping account numbers confidential. Because of this, ACH payments are more secure than other forms of payment. Paper checks that pass through multiple hands, clearly display bank details and are too often lost or stolen. The Electronic Fund Transfer Act gives a period of 60 days to recover funds lost to ACH fraud or error, so if there is an issue with your payment, you have the chance to resolve it.

What’s keeping businesses from embracing ACH payments?

With so many advantages, there is a reason why 40% of business-to-business (B2B) bills are still paid via check, and that reason is fear. Many businesses are still reluctant to share their bank account details, concerned it may fall into the wrong hands. But, is that fear still justified today?

How safe are ACH payments?

ACH is regulated by the federal government and managed by the National Automated Clearing House Association (Nacha), a non-profit organization that regulates, administers, and facilitates the ACH network. 

ACH fraud and error are uncommon thanks to the rule guide set by Nacha and the preventative measures inherent in the banking and fintech industry. 

While the rate of error is low, standing at approximately 0.33% of transactions, every business owner should acknowledge, understand, and safeguard their payment process to reduce risk and promote safety when leveraging ACH transactions.

ACH security measures to pay attention to

To make sure your ACH payments are smooth and safe, keep an eye out for these precautions.

Trusted provider

‍To ensure security and safety in transactions made, it is highly recommended that all third-party payment processing systems be compliant with Nacha’s operating rules. (Melio is trusted by businesses, banks, credit card issuers, and financial institutions throughout the U.S. ✅) 

Protect private information

Tokenization and encryption are two effective ways of securing information by reducing data exposure. 

Encryption is a process that encodes data to ensure that it is only read by its intended recipient. When it comes to ACH payments, Nacha mandates encryption technology when transmitting via an unsecured network (such as the internet). So make sure the platform you use encrypts (Melio does this ✅)

Tokenization replaces private information (such as an account number) with a unique and unrelated set of characters. This token number does not hold any value, making it worthless to others. It is recommended to use tokenization in ACH transactions made through third-party providers (Melio does this ✅)

Micro deposits

As an added layer of security, many third-party payment processors make small-deposits into a user’s bank account to verify their identity before any formal financial transactions can be made. (Melio does this✅)

Old habits and fear of the unknown are what stop most small business owners from using ACH as their preferred method of payment. These should not hold you back from using a faster, cheaper, and significantly safer payment method to make sound business transactions.

How to make ACH payments even safer for your vendors

We’ve already established that ACH bank transfers are a relatively safe way to send money. But, using a dedicated B2B payment platform, like Melio, to pay your vendors can make them even more secure.

When you use Melio, your vendors’ details are encrypted and tokenized to ensure they remain private. You can even ask your vendor to fill them out for themselves if they’re worried about potential exposure.

Sign up for Melio today to start sending secure ACH payments to your vendors online.

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.