Simplifying payment processing and streamlining accounts payable departments are two ways you can save your business time and money, which is always a worthy goal.
If your business is looking for the best solutions to processing secure payment to vendors, clients, and other businesses, then you may have already heard about ACH payments or Virtual Cards.
ACH payments give you the security and flexibility to set up recurring payments from your business bank account to another account, while virtual cards provide added security and control over funds. We compare the two in this article to see how each stack up against the other depending on your business needs.
ACH Payment Overview
Using ACH to process payments or funds is simple and secure. 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 such as credit card processing do not apply. Businesses can initiate automatic payments using ACH Debit transactions or one-time authorized payments using ACH Credit transactions.
ACH transfers are considered to be one of the safest methods of money transfer in the United States.
Virtual Cards Overview
Virtual cards contain numbers different from a company’s debit or credit card numbers. These numbers are generated for payment purposes only and expire within a set amount of time.
The biggest advantage to using virtual cards is the amount of control your business has over them: when creating a virtual card, you control the payment amount, the date the payment will expire, and set limits for ongoing corporate expenses. There is little risk in using virtual cards, as they are not tied to your company’s actual bank account or credit card accounts.
Think of virtual cards as single-use gift cards, set limit corporate cards, or one-time-use payment cards for vendors.
Choosing Between ACH and Virtual Cards for Your Business
Both of these payment types offer a high level of security: the ACH Network is a safe and reliable way to transfer funds from one account to another and is protected by law, and virtual cards allow your business to make payments without disclosing bank account or credit card information to the recipient.
In comparing the two, virtual cards offer an added layer of protection and control to payments.
Virtual cards are valid only until payment is processed, preventing fraudulent charges, and authorized virtual cards can have set credit limits to avoid overspending.
ACH transfers require bank account and routing information, as well as personal information, before authorization. If you are dealing with an unknown vendor, it may be a better idea to use a virtual card to ensure your funds remain secure.
With ACH payments, however, you can set up recurring payments to vendors and eliminate the need to initiate transfers manually. If you are looking to fully automate your AP department, using ACH for regular payment processing can save your company a lot of time, energy, and frustration.
With virtual cards, you may need to issue a new card each month for recurring invoices, which can potentially lead to errors or payment delays.
ACH Payment vs. Virtual Cards at a Glance
Easy, secure, and reliable payment methods – this is what your business is looking for, right?
Both ACH payments and virtual cards offer you the ability to control your electronic payments through secure systems. With ACH payments you have the added benefit of using the safest method of payment available, but will need to exchange bank account information with your vendor or client.
Virtual cards are not directly linked to any bank or credit card account, so your sensitive information is less vulnerable to fraud, but setting up recurring payments by issuing new cards can become tedious. If your business is looking to have complete control over your funds, virtual cards let you set credit limits, expiration dates, and payment release.
If you need a payment method for sending regular funds to a trusted vendor, ACH transfers might be the smart choice.