A Guide to ACH Payment Processing for Small Businesses

Automated Clearinghouse (ACH) payments are a type of electronic bank-to-bank transfer that lets you get paid (and pay others) securely, quickly, and often at a lower rate than other payment methods. In 2024 alone, over $86 trillion moved through the ACH network.^[1]NACHA. “About Us.” Accessed June 18, 2025. If you’re not taking advantage of ACH payments yet, it might be time to add them to your payment toolbox.

This guide on ACH payment processing for small businesses looks at how these payments work and walks through the steps you’ll need to take to start accepting ACH payments at your small business. 

• ACH payments are a type of electronic funds transfer (EFT) that transmit funds from your customer’s bank account to yours.
• Your business must adhere to the rules set by the National Automated Clearinghouse Association (NACHA) to receive payments via the ACH network.
• Small businesses can start accepting ACH payments by working with a payment solutions provider.

What Are ACH Payments?

An ACH payment is an electronic money transfer from one account to another. Think of it like a digital handshake between two bank accounts. When a customer sends you an ACH payment, money transfers directly from their bank account to yours — no card network facilitation necessary. For small businesses, this can mean lower fees, fewer headaches, and more reliable small business financial planning. It’s especially useful if your small business offers subscriptions, memberships, or operates on small margins.

How Do ACH Payments Work?

Here’s the simple version of ACH payment processing for small businesses:

1. Your customer provides their bank details, including account and routing number.
2. Your payment provider sends the transaction information through the ACH network.
3. The funds move from your customer’s bank to your merchant account via the ACH network. This may take one to three business days.
4. After settlement, you can move the funds from your merchant account to your business checking account.

What Are the Benefits and Drawbacks of ACH for Small Businesses?

Benefits 

• Lower Cost: Typically, flat ACH fees range from $0.20 to $1.50 per transaction. For a higher risk small business, ACH processing fees may also include a percentage of the transaction, ranging from 0.5% to 1.5%. Compared to credit card processing, ACH fees are usually more cost-effective.
• More Security: Unlike credit cards, ACH payments are less prone to fraud. And unlike a wire transfer, an ACH transaction can be reversed. There’s also less risk of disputes compared to credit cards. However, small businessess may have to occasionally navigate ACH reversals.
• Easy Setup: ACH processing offer customers a one-form, one-time payment setup — then it runs automatically for recurring services. Plus, unlike credit cards, there are no expiration dates or security codes to update.
• Stable Cash Flow: Because chargebacks or reversals are less common, you’ll have a better sense of cash flow — especially if you’re utilizing recurring payments or subscription billing.

Drawbacks

• Processing Time: ACH transactions can take up to three business days to settle. However, this extra processing time ensures funds transfer securely. 
• Transfer limits: The National Automated Clearinghouse Association (NACHA) sets an ACH transfer limit of $1 million for same-day transfers. Individual banks can have lower limits. If you are worried about hitting your bank’s limit, you can request an ACH transfer limit increase from your bank.
• International Limitations:  ACH payments are generally limited to the United States. Money transfers outside the U.S. require alternative payment methods.

How Do You Set Up ACH Payments for a Small Business?

Using ACH payment processing for small business transactions is a win-win. It offers set-it-and-forget-it convenience for your customers and predictable cash flow for you. Let’s explore the steps to get your small business started with ACH payments. 

1. Set Up a Business Bank Account

You’ll need a business checking account to access ACH payment processing for small businesses. If you don’t have one, most banks will ask for:

• Employee identification number (EIN)
• Business licenses
• Ownership structure (LLC, partner agreements, etc.)
• Contact information and government-issued identification

By opening a business bank account, you can limit your personal liability and have more control over your cash flow. Try to find a bank that offers low fees, solid introductory offers, and reasonable minimum account balance requirements. You’ll also need to set up a merchant account. This account temporarily holds funds while your small business transactions — like ACH payments — are finalized.

2. Choose an ACH Payment Provider or Processor

Customers like the convenience of paying with credit cards, ACH payments, and digital wallets. If you want to accept these payment methods, you need a payment processor to handle the technical side of things. When searching for the best ACH payment processing for your small business, some good questions to ask include:

• What is your expected monthly volume of transactions?
• Does the payment provider support other payment methods?
• What resources does the provider offer to combat ACH disputes?
• How much are the ACH fees?
• Does the payment processor integrate with your existing website?
• What is the reputation of the payment processing company?

Pro Tip: Some providers can bundle everything — ACH, credit cards, merchant account, payment gateway — into one package. If you don’t want the hassle of setting up different accounts, try to find a provider that offers an all-in-one solution.

3. Get Authorization From Customers

All ACH payment processing for small businesses requires explicit permission from the sending party, your customer. You’ll need to request permission from your customers to make ACH payments for your small business. To do so, outline your small business’s ACH procedures and request the customer’s bank account number, routing number, and signature. Once you have the signed form, you’ll need to store it securely. 

To utilize ACH services for small business recurring payments or subscription billing, you’ll need a separate form outlining the transaction process with a clear explanation of the charges to obtain customer permission. 

4. Ensure Compliance With NACHA Rules

As the governing body of the ACH Network, NACHA has rules around data security, fraud protection, and customer notifications. These include:

• Verifying customer identity, routing number, and account information
• Notifying customers of any changes to their recurring ACH payments
• Canceling recurring payments immediately upon the customer’s request
• Adopting new NACHA rules and regulations in a timely manner

Failure to comply with NACHA’s regulations can result in fines, operational delays, and even loss of ACH payment processing. 

The Best ACH Payment Processing for Small Businesses

You don’t have to figure out ACH payment processing for your small business alone. Whether you’re an eCommerce store, a small retail shop, or a high-risk merchant, there are payment solutions providers with the tools and resources your unique business needs.

PaymentCloud is a full-featured payment solutions provider that supports multiple payment methods. With our help, your small business can accept ACH payments, credit cards, debit cards, and more — online and in person. Find out how PaymentCloud’s ACH payment processing can help you improve your cash flow, profit margins, and business operations.

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