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Stripe and ACH Payments
Introduction to Stripe and ACH Payments
In the fast-paced realm of digital transactions, businesses require dependable and flexible payment solutions to cater to their varied demands. Stripe, a prominent online payment processing platform, provides an extensive range of services aimed at simplifying payment acceptance and management. Among its numerous features, Stripe's support for ACH (Automated Clearing House) payments is particularly noteworthy, offering businesses a robust method for efficiently managing bank-to-bank transactions.
Stripe and ACH Payments: How ACH Payments work?
- Initiation of ACH Payments -To start an ACH payment, you need the payer's authorization, which can be obtained through a signed form or electronically. You also need the payer's bank account number and routing number to process the transaction.
- Submission to ACH Network -ACH payments are processed in batches by the payee's bank (ODFI), which collects payment requests and submits them to the ACH network, usually at the end of each business day. Managed by NACHA, the ACH network facilitates fund transfers between banks, ensuring accurate transmission of payment instructions.
- Processing -The ACH network sorts payment instructions and routes them to the appropriate receiving banks (RDFIs), verifying details and ensuring compliance with NACHA rules. Once the RDFI receives the instructions, it processes the transaction by debiting the payer's account and crediting the payee's account, following the payment schedule and regulations.
- Settlement-The ACH network handles the actual transfer of funds between the payer’s and payee’s banks, where the funds are transferred electronically, debiting the payer’s account and crediting the payee’s account. Both banks then update their records to reflect the transaction, with the payee’s bank showing the funds in the payee’s account and the payer’s bank showing the debit.
- Confirmation and Reporting -Once the transaction is processed, both the payer and payee receive confirmation, often through account statements or electronic notifications. Banks and payment processors provide reporting tools to help businesses track and reconcile ACH payments, offering detailed reports on transactions, returns, and any exceptions.
- Handling Exceptions -ACH payments can be returned or reversed in situations such as insufficient funds or incorrect account details, with these returns processed through the ACH network according to specific rules and timelines. In the event of a dispute or error in an ACH payment, resolution can be achieved through the bank or payment processor, with both parties following the appropriate procedures.
Stripe and ACH Payments: How to use ACH with Stripe?
- Enable ACH Payments -To begin, log into your Stripe account via the Stripe Dashboard. Ensure that your Stripe account is verified and configured to handle ACH payments by providing the necessary business information and verifying your bank account details. Next, navigate to the "Payments" section in your Stripe Dashboard and, under "Payment methods," make sure ACH is activated. If it is not already enabled, Stripe will guide you through the necessary steps.
- Collect Customer Information -To process ACH payments, you need to collect your customer's bank account information, including the account number and routing number. Additionally, obtain authorization from your customer to debit their bank account, which can be done via an online form or a paper authorization form, depending on your setup.
- Implement ACH Payments -To set up ACH payments with Stripe's API, use the PaymentMethods and SetupIntents APIs, with documentation providing code examples. For Stripe Checkout, enable ACH payments by configuring your session to include ACH. Create a PaymentIntent object with the ACH method using the Stripe API. After the customer provides bank details and authorizes the payment, confirm the payment, which may involve additional steps based on your integration.
- Handle ACH Payments-ACH payments typically take 3-5 business days to process, so be sure to communicate this timing to your customers. Use the Stripe Dashboard to monitor ACH payments and manage any issues that arise, with Stripe providing reporting and tools to help you track and reconcile payments. Additionally, be prepared to handle disputes or chargebacks, as ACH payments can be subject to these issues; Stripe offers tools and guidelines for managing disputes.
- Compliance and Best Practices -Ensure that you are compliant with ACH regulations and Stripe’s requirements, which include obtaining proper authorization from your customers and adhering to privacy and security standards. Additionally, provide clear instructions and communication to your customers about ACH payments to ensure a smooth experience.
Stripe and ACH Payments: Pricing Structure
Stripe’s pricing model for card and ACH payments is simple and transparent. For online card transactions, the fee is 2.9% plus 30¢ per successful charge for domestic cards. In-person transactions are charged 2.7% plus 5¢ per successful charge. Additional costs include a 1% fee for international cards and an additional 1% for currency conversion. ACH payments cost 0.80% per transaction, with a maximum fee of $5, meaning transactions over $625 incur no more than $5. ACH payments do not have any monthly or verification fees. Stripe also offers various additional services, such as 3D Secure authentication at no extra cost for standard accounts and 3¢ per attempt for custom pricing accounts. Card transactions have a $15 dispute fee. Instant payouts are available at 1.5% of the payout amount, with a minimum fee of 50¢.
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