Business Ideas

Why Use An ACH API Provider?

Utilizing an ACH Processing Application Program Interface (API) for your SaaS application provides financial and risk mitigation benefits, both from a financial and risk mitigation perspective ACH API Providers facilitate the debit/crediting of bank accounts for SaaS platforms via an ACH network. Compared to traditional credit card payment processing, this subscription-based approach to payments offered by ACH API is a more cost effective payment processing solution for businesses.

ACH Processing Vs. Traditional Credit Card Payments

While traditional credit card processing fees cost businesses around 2-3% of a transaction, ACH processing costs are typically a flat 25-50 cent fee. Savings are particularly effective in a recurring billing model, and larger transaction volumes mean better savings.

Credit card transactions include a percentage of the transaction (discount fee), with different rates depending on whether or not the card is present during the transaction. The card not present rate is far more expensive than the card present rate. 

For example, $49 per month subscription payment would have a credit card discount fee applied of around $1.45. As an ACH transaction this discount fee could be only 29 cents. 

A larger volume of payments means more savings, for example imagine 2,500 subscribers at the same subscription price. The total monthly credit card processing fees will total over $3,600. Converting only 50% of these payments to ACH means $1,400 saved monthly.

ACH Processing API Benefits

There are multiple non-financial benefits of ACH API Providers as well.

Firstly, unlike credit cards a checking account doesn’t expire. Expiring credit cards are the most common problem in the subscription world, with credit card declines averaging at around 15%. 

The man hours alone to rectify the problems caused by an expired payment method (contacting the customer, switching payment methods, etc.) are a major pressure point for subscription based businesses. Loss of revenue is a common scenario caused by the expenditure on man hours, and in the instances when new payment information can’t be procured. 

ACH API Providers also provide businesses withan additional payment rail, with checking account information acting as an alternative payment method should a credit card transaction be declined, and providing an alternative to customers without credit cards. An ACH Processing API allows for near-universal inclusivity. 

Make sure to look for a flat-rate fee for any ACH transactions. Providers often price their ACH transactions using a discount fee, and this is only financially prudent for organizations with very small transaction amounts. 

Meeting Your Business’s ACH Needs

For SaaS applications using subscription models, utilizing an ACH API Provider provides clear financial benefits, and a range of other positives for both the application and subscribers. 

For almost 20 years, Agile Payments have been offering premium ACH API integrations to businesses of any size. Contact Agile Payments for more information.

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