Credit cards offer a way to make many small or large purchases on credit and put off payment to a later date.

Many businesses use credit cards for upfront purchases if they do not have the immediate funds needed, which can be costly based on interest rates or payment schedules. Accepting credit card payments as a business is an easy and quick way to receive electronic payments, particularly for businesses operating solely online.

ACH payments allow your company to work within its current finances and provide secure fund transfers from one bank account to another. In comparing these two payment methods, overall cost is the biggest factor to consider.


ACH Payment Overview

Using ACH to process payments or funds is simple and secure. In fact, it is considered to be one of the safest methods of transferring money in the United States.

ACH payments are processed through the Automated Clearing House network and involve transferring money from one bank account to another. Since money is transferred directly to and from bank accounts, fees associated with other payment methods do not apply. ACH payments come at a much lower expense – often free – than many other payment types.

Businesses can initiate automatic payments using ACH Debit transactions or one-time authorized payments using ACH Credit transactions. ACH transactions draw from available funds rather than from a credit limit, giving businesses better control over their immediate finances.


Credit Card Overview

Credit cards allow you to make purchases using money borrowed from your bank or another financial institution.

This purchase is made on credit and must be paid back within the allotted time frame so as not to incur late fees. Businesses can use credit cards to make large, upfront purchases that can be paid off in smaller scheduled amounts. For new businesses, credit cards can be beneficial in establishing infrastructure or other needs.

Accepting credit card payment as a business can guarantee payment since other types of payments that draw from bank accounts can return with insufficient funds or routing errors.

Allowing customers or vendors to use credit cards means you are not required to give or store bank account information and will receive payment quickly.

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Comparing Options for B2B Payments

As mentioned above, ACH transfers require bank account and routing information to initiate a transfer of funds. It is one of the safest methods of accepting or receiving payment, but can cause some issues on the receiving end.

If you receive an ACH payment from a client account, but it gets rejected for insufficient funds, you may not know for several days while the ACH processes your payment.  Compare this to credit cards, which offer funds for payment immediately. With credit card payments, businesses receive money right away and are not subjected to the same risk of a returned payment.

On the other hand, ACH transfers offer a less expensive means of transferring money because it circumvents credit card processing that can often charge additional fees.

Over time, these fees can add up and end up costing your business more money than it may be worth. Additionally, credit card processing can cause immediate payment delays if the company or vendor is not within their credit limit, preventing you from getting paid. By using trustworthy vendors, ACH transfers offer a safer and much less expensive means of payment.

ACH vs. Credit Cards at a Glance

The biggest difference between the two types of payment methods is cost.

For businesses looking for a simplified vendor payment method, accepting credit cards may be an expensive option but can guarantee payment in a way other direct payment methods may not. ACH payments transfer money from one bank account to another, relying on available funds to make payments or purchases.

If your business is looking to maximize profits, ACH offers an inexpensive and often free option to handle electronic payments.

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