GUIDE
While the inexpensive per transaction cost of ACH is the siren call that draws many businesses to the ACH Network, the complexities of partnering with a Financial Institution (FI) to access the ACH Network may turn some hopefuls away.
The ACH Network is ideal for businesses that need to initiate payments but want to avoid paying costly per transaction fees. ACH payments are typically much cheaper than the fees charged by credit card companies, which are based on percentages and become more costly the higher the transaction value.
Businesses can automate ACH payments to save time and material, making them 10 times less expensive than checks. Every business knows that saving money for the same service is good—however, there can be quite a bit of work involved to actually integrate with the ACH Network.
Businesses have two options to get started:
- Partner with a FI to access the ACH Network
- Integrate with a payment platform, such as Dwolla, to access the ACH Network
Let’s dive a bit into each of these options, to see how your company could benefit from partnering with Dwolla:
Partnering with a financial institution to access the ACH Network means that your business would need to open a checking account and sign a contract with the financial institution to utilize the ACH Network. In this scenario, your business would become the Originator, and you would work directly with the financial institution—and their user interface—to process ACH payments. Visitors to your platform or application would typically initiate a payment directly through your interface and you would need to collect their information and import it into an ACH file, which has specific formatting requirements.
This ACH file would then need to be securely transmitted to your financial institution partner, who would then submit the ACH file to the ACH Network for processing.
Risk & Compliance Responsibility
Being an Originator means complying with the NACHA Operating Rules and Uniform Commercial Code (UCC) (Uniform Commercial Code) Article 4A, among other regulations.
As part of these requirements, your business would be responsible for:
- Risk Management
- Having the proper Standard Entry Class (SEC) codes
- Creating and securely sending an ACH file
- Responding appropriately to Return Reason codes
- Staying under specific Return Thresholds
With more than 80 ACH Return Reason codes, customers can be notified for many reasons about their transactions, and it is important to create the necessary communications—and include the required information—to ensure a positive user experience, while also remaining compliant with NACHA rules.
On top of those issues, your business is responsible for:
- Monitoring suspicious activity
- Verifying identities
- Cooperating with Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) laws
Banks typically offer some assistance in these areas, but ultimately, the Originator is responsible for making sure they are in compliance with financial regulations.
Privacy & Security Responsibility
Handling sensitive financial information means you need a deep understanding of how to properly encrypt your customers’ data. Each financial institution may have its own encryption requirements for sending the ACH file through a secure transmitting portal to get the file from your servers to your banking partner. Your business will be responsible as the Originator to ensure your customers’ personal data (including routing and account numbers) is transmitted safely and securely.
Need help with these ACH terms? Use an ACH Glossary.
Customer Support & Staffing Responsibility
As an Originator, you are your own support team. This means troubleshooting problems on your own.
Your company’s in-house support team needs to know the ins and outs of the ACH Network. ACH payments can come with a variety of hiccups and as transaction volumes increase, additional support staff could be needed to handle requests derived from your payment solution.
In order to handle all the aforementioned considerations, you’ll likely need help from several full-time employees. Consider the staff needed to support building ACH files in-house, as well as the capacity to expand upon additional features when customers request them.
Ongoing training for employees on ACH payment processing best practices, security and compliance requirements is also required.
Bottom Line
Partnering with an FI and having to build your own ACH files is like building your own house. It will be costly and require lots of work.
At the same time, making sure the house is up to code, the sidewalk is maintained and the driveway is shoveled is your responsibility. If your refrigerator breaks down, if the basement floods or the roof is damaged, you’re responsible for the repairs and costs.
There is no landlord to call.
Dwolla’s payment platform operates the way a landlord might in a rental home. As ACH experts, we help you with keeping the building up to code and removing roadblocks so tenants can move in quickly and start living there.
Dwolla is a payments platform with a deep understanding of the ACH complexities that our customers face. With our many years of expertise, we work with our customers to ensure they are following NACHA-recommended best practices.
Dwolla works hand in hand with its financial institution partner to process your customers’ ACH payments. This means that you do not have to negotiate a complex ACH agreement directly with a financial institution to gain access to the ACH Network.
Ease of Integration
When your company signs a contract with Dwolla, you gain access to an API that has already been built. Dwolla’s white-label API means that your company’s end users can seamlessly initiate transactions using your website or app, we do the heavy lifting in the background. Our payment platform comes with an experienced staff ready and waiting to assist your business with integrating your product or platform.
The Dwolla API comes with extensive documentation and developer resources, as well as an easy-to-use sandbox testing environment which allows your developers to discover how nicely Dwolla plays alongside any existing payments technologies you’re also utilizing.
Our job is to seamlessly scale along with your business. Facilitating a great experience post-go-live is still paramount to our platform.
Speed to Market
Instead of spending months configuring ACH file formats and hiring staff with the necessary expertise, Dwolla’s payment platform can get you transacting in a fraction of the time. If you want to go to market with your product quicker, this is a great benefit of partnering with Dwolla.
Working with Dwolla can speed up your product’s launch date, gaining you valuable time in the marketplace and establishing credibility with already smooth payment processes.
Cut your implementation to a fraction of the time without cutting corners.
Our team will help you build programmatic payments into your platform so that you can get to market faster.
Customization & Additional Integrations
Dwolla is constantly improving its API, while allowing each business to customize the experience to match its branding.
Dwolla offers additional integrations for bank account verification and fraud monitoring, and our professional services team can develop a custom feature to help your business support your users.
From account creation to payment notifications, Dwolla takes an iterative approach and relies on customer feedback to improve the Dwolla Platform and continue offering the ideal end-to-end payments experience.
Dwolla has been instrumental in providing us with a reliable payment solution that we look forward to helping us scale our business.
Customer Support
One large difference of partnering with Dwolla versus an FI is the level of customer support.
Dwolla offers customers direct lines of support to resolve issues in real time, via email and Slack. We support our customers at every step of the integration with our in-house development and payment experts.
Privacy & Security Considerations
Information security can be complex, so working with an established payment platform such as Dwolla that has security experts on staff can ease your mind.
We are continuously testing because we should know some adversarial techniques. There are tools and techniques we can use against ourselves to validate that our controls are working. So my team’s job isn’t just to play elite defense, it’s to know how the offense works too.
Predictable Costs
Building your own ACH files and partnering with an FI comes with many unknowns: development time, resource needs, cost considerations.
Working with a payment platform such as Dwolla means having more predictable costs upfront and over the life of your contract. With Dwolla, you can count on some predictability to your business and its bottom line.
Dwolla works closely with each customer to determine the best pricing plan for your custom ACH solution. Receive priority support and access to industry professionals every step of the way.
“Dwolla’s flat monthly pricing is something that allows us to still make money and add significant value to our application in other areas.”
Bottom Line
Dwolla has been innovating the way businesses and developers interact with the ACH Network for years. Our customers utilize our ACH payment API to design their ideal ACH solution, with support from our payments professionals and developers each step of the way.
Furthermore, our team relies heavily on customer feedback to continually improve the Dwolla API. This feedback leads to custom solutions that become features of the >Dwolla Platform>. We are committed to constant improvement because at Dwolla, we are never done.
The ACH Network has the potential to benefit any business, but every business is different and has different needs. Businesses that want to get to market faster and would rather purchase expertise as opposed to growing it in-house would do well to look into a payment platform.
Companies looking for a payment platform with a sterling reputation for customer service, security and uptime should consider Dwolla.
Dwolla really allows us to scale and not worry about that part of our business. If you have a lot of customers that you need to pay, I don’t know if there’s a better solution than Dwolla.
In Summary
If you want to process ACH payments, there are two options to get started: partner with a Financial Institution to access the ACH Network or integrate with a payments platform, such as Dwolla, to access the ACH Network.
This guide weighed the following:
- Security and compliance considerations
- Speed to market
- Customization options
- Staffing considerations
- Ease of implementation
- Risks and responsibilities
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