Bank Transfers and Your Business: How and When to Integrate

Payments may not be the sexiest topic. However, if you run an online business, the ability to facilitate payments to, from, or even between your customers or vendors is a non-negotiable for building a successful company.

One of the most affordable, albeit also most complicated, forms of accepting payments is via the ACH network. But what are ACH payments?

ACH stands for Automated Clearing House. It’s an electronic network that allows banks and their customers to send funds between one another in the United States. Basically, the ACH network allows you to send and receive bank transfers via an online interface. By entering your account and routing number or logging into your online banking platform to send a payment, your payment is being processed through the ACH network.

According to a report from the Federal Reserve, there is less fraud involved in ACH transfers as compared to credit card transactions.

Common ways businesses use ACH payments:

• Payout contractors or employees
• Pay vendors or sellers
• Accept high-dollar transactions (avoid the high credit card processing fees)
• Issue dividends to investors
• Receive payments that are subscription or usage-based (utilities)

How your business can benefit from ACH transfers

When leveraged properly, ACH transactions can be extremely powerful and flexible—allowing you to facilitate payments in a multitude of ways. However, building your own infrastructure to handle processing bank transfers, rejections and corrections can be costly when navigating compliance and security requirements.

In order to determine whether you should be investigating an ACH payment solution, begin by mapping out all of your ideal payment scenarios. Ask the following questions:

• How would you like to accept payments from your customers?
• How would you pay out your vendors?
• Would you prefer to build in a fully automated payment network, with credit and bank transfers working together?
• Would you be okay using a ready-made payment solution that requires customers to interface with the payment provider?

Don’t forget about things like returns, insufficient funds, and fee splitting. Look for places you can save money, where you can be offering a better end-user experience and where it makes sense to use credit versus bank transfers.

After considering these questions and scenarios, the big decision you will have to make is whether you want to build your own ACH interface with a bank or leverage a third party to facilitate bank transfers.

If it’s not part of your business plan to build your own ACH transfer solution, chances are you can get up and running more quickly with a third party integration. A third party saves you the time of navigating the complex rules and regulations of the ACH network—tap into that provider’s established banking and financial relationships, rather than going out to establish those on your own (which can take months or years).

Things you should consider when evaluating ACH payments provider:

1. Flexibility: ACH transfers can be facilitated by companies that have open sourced their own ACH APIs. These APIs allow you to tap into their network of experts and functionality in order to make ACH transfers work for you, in a way that fits with your business and customer needs.
2. Customizeable: A quality API allows for various customization options and control and is adaptable for specific use cases and scenarios. The ability for an API to scale alongside your business—whether it’s on the front or backend of your product—is imperative.
3. Straightforward documentation: Software providers that have put in the time to accurately and clearly document their APIs for the developer community is invaluable.
4. Working examples: Find an payments API with a variety of use cases demonstrating it’s ability to develop a tailored solution that works for your unique needs.
5. Great support: When developing payments into your platform, there may be questions that you need to float by someone that works on that API for a living. There’s great value in finding a service that is committed to getting you and your product to market.

How Dwolla can help you leverage bank transfers.

Dwolla provides an easy on-ramp to the ACH network, making it simple to integrate bank transfers into your platform. We even help you manage fraud and compliance considerations. But don’t take just our word for it, we have a wide variety of partners leveraging Dwolla in innovative ways to bake ACH payments into their platform:

• One of the fastest-growing marketplaces in the U.S. pays out their vendors via Dwolla’s ACH solution
• A solar investing platform uses the Dwolla solution to collect from investors
• A rental management platform leverages Dwolla to collect tenant payments
• A crowdfunding real estate investment platform uses Dwolla to move funds within their platform

Interested in how you could get started with an bank transfer integration? A Dwolla integration specialist would be happy to help!

This guest blog post is written by Caitlin Zimmerman, Marketing Manager for Dwolla—a simple and powerful bank transfer API with no per transaction fees. Dwolla provides an easy on-ramp to the ACH network for business and individuals.