B2B Payments

Economic Climate Offers Prime Time For Small Biz ACH Adoption

Even the largest banks struggle in joining various payment schemes, analysts say. For small businesses looking to gain efficiencies by adding support for various payment schemes like the Automated Clearing House, that burden can be even greater.

Payments solution provider E-Complish recently championed SMEs’ joining of the ACH system, urging entrepreneurs to overcome the hurdles to gain benefits of a technology that can reduce friction when sending and receiving payments.

Further, according to Bill Pette, western territory director at E-Complish, the challenges to accessing ACH payment capabilities are diminishing.

“There are not many challenges when using ACH processing for either debiting or sending a credit,” he recently told PYMNTS, adding that the payment rail is “a secure, easy, fast way to process payments.”

The latest data suggest small businesses are more willing today than ever to do what it takes to gain access to the ACH scheme, especially as real-time ACH payments entice businesses thanks to capabilities for faster supplier payments or real-time payroll.

According to data from ACI Worldwide and YouGov released in April, the majority of small businesses in the U.S. said they would even go so far as to ditch their current bank for another one that offers real-time payment capabilities.

Nearly three-quarters of U.S. SMEs said they value receiving payment from customers in real-time, with more than half (54 percent) highlighting the value of paying suppliers in real-time.

SMEs “most certainly will increase cash flow with Same Day ACH processing,”  Pette said, “and by adding real-time payment processing … will set the business owner apart from the competition, allow the business to increase cash flow and offer their customers something that they demand today.”

Interestingly, however, 81 percent of U.S. SMEs haven’t heard of The Clearing House’s real-time payment scheme, a statistic analysts said that shows the effort banks need to make to educate their own small business employees.

Further, there is also the ongoing challenge of changing payment behavior — especially for small businesses that have historically depended on paper checks to pay employees and suppliers.

According to data from Bottomline Technologies, the cost of paying with a paper check is 10 times that of paying with ACH. Receiving a paper check, meanwhile, is five times as expensive as receiving an ACH payment. At the time of its survey, nearly 80 percent of companies said they were transitioning to electronic payments from checks. But ACH payments are used less prevalently among smaller companies, the report said.

“It may be that the business is small and just set in their ways when it comes to taking checks,” Pette said. “A business owner needs to offer multiple solutions so his or her customers have several options when it comes to paying bills in today’s fast-paced, gotta-get-it-done-right-now or today attitude.”

In a statement released last month, E-Complish CEO Stephen Price offered a similar sentiment about small businesses’ use of checks.

“Paper checks are dying, and ACH is now the norm,” he said. “With that in mind, ACH should be a natural part of your payment acceptance and remittance process.”

The nation’s current economic climate is prime time for ACH payments to get off the ground among small businesses, E-Complish noted. Stocks are up, and the federal government wants to cut corporate tax rates — the rising optimism among small businesses in the country is well documented.

U.S. Bank, for example, found in May that small businesses are planning revenue increases and capital investments as employment levels continue to rise. Its Small Business Annual Survey found 80 percent of small business owners described their own companies as “strong,” marking what U.S. Bank said was a “historical high” for the survey.

“No doubt corporate tax cuts will help energize American businesses, but improving efficiency shouldn’t be overlooked as a valuable savings tool either,” Price added. ACH payments, both he and Pette said, are a surefire way to achieve that efficiency small businesses need to take advantage of a promising market.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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