Update: This blog was published in 2014. For up-to-date information please visit our eCheck/ACH support documentation.
Many merchants have been pressing us to add “ACH” or “eCheck” payments in the USA. With ACH payments, your customer pays you directly from their bank account. Fees for ACH transactions are less expensive than for any other form of payment:
• You will pay 2-3% for credit card processing, and that’s for “qualified” transactions… certain card types (business credit cards, American Express, etc.) can push the cost up to literally 4%, depending on who you use for card processing.
• ACH transactions through Authorize.Net cost you just 0.75% and get less expensive as your volume increases.
The average Chargify merchant pays $438/mo for credit card processing. With ACH, they’d pay $146/mo.
Requirements for ACH Payments
Here are the basics to start using ACH with Chargify:
- You must be a US-based merchant, billing US-based customers (Access to bank accounts is somewhat tied to countries. We hope to have a similar service in other countries in the future.)
- You must have a Chargify account on our $149/mo plan or higher
- You need a payment gateway that supports ACH transactions
The most popular gateway among our US merchants is Authorize.Net, and Authorize.Net is also one of the few that has had ACH in place for awhile. So the decision was easy: We chose Authorize.Net for our path to ACH.
- If you’re already using Chargify with Authorize.Net as your payment gateway, you need to get approved for ACH/eCheck processing through your Authorize.Net account.
- If you do not have an Authorize.Net account, you can apply for an account below. Approval time varies, but can take a little as 30 minutes!
Chargify Site Settings
From this point forward in this blog post, we’ll assume that Authorize.Net approved you for ACH/eCheck processing.
1. In your Chargify Site Settings, make sure your Payment Gateway is set to Authorize.Net, and that Authorize.Net has approved you for ACH/eCheck processing!
2. Also in your Chargify Site Settings, enable ACH as a payment option:
Allowing Customer ACH Payments
Once you have your Chargify Site set up for ACH payments, your customers can start paying you from their bank accounts. But how you get their bank info varies with how you sign them up and how well you know them.
ACH guidelines place the responsibility on you, the merchant, to reduce fraudulent or incorrect use of bank account info. It’s your duty to know your customer at least somewhat, to know who they are, and to gain enough trust in them to let them enter bank account info.
Merchants use 1 of 2 basic paths to get their customers into Chargify: Chargify-hosted pages/forms, or API calls (where you make your own signup forms).
ACH is handled differently with each path:
• Chargify Hosted Pages for Signup and Payment Updates
If you are using the Chargify-hosted pages for things like signing up customers and allowing them to update their payment info, then the customer flow works like this: 1) Customer signs up, 2) THEN gets approved by you for ACH, and 3) THEN gives their bank account info.
• Chargify API / Chargify Direct
If you are using your own forms and connecting to our API to sign up customers and update their payment info, then you can sign up new customers with bank info from the start. This is easier for you and for your customers, but it assumes you have a closer relationship with your customers and you trust them to enter their bank account info.
(Note that the hosted customer Portal does not yet support ACH, regardless of how customers got signed up in Chargify. We will come back to this as we get overall feedback re ACH and how merchants and their customers are using it.)
ACH Payment Flow with Chargify Hosted Pages
If you’re using Chargify Hosted Pages to get your customers signed up and to collect payment info from them, here’s what you’ll do to get them paying via ACH:
1. Your customer signs up for your product using the product’s hosted signup page. They will NOT be able to enter bank account info on that form. So you will need to have them sign up with a credit card OR sign up for a free product OR a paid product that has a free trial period. The point is to get them signed up without any payment info OR with a credit card, which they will later change to ACH.
2. Find your customer in Chargify. You can search by customer or by subscription.
3. Enable ACH for your customer. Here you can see two screenshots: one from the find-by-customer method, and one from the find-by-subscription method. They both work just fine; it’s really just your preference:
4. Send the Update Payment Profile form to your customer. You’re basically inviting them to give their ACH bank info:
5. Your customer receives the email/form and enters their bank account info here:
From that point forward, your customer will pay you via ACH. If there is ever any change to the recurring amount or timing, you will need to notify your customer, telling them of the new arrangement. This is an ACH requirement.
ACH Payment Flow with API/Chargify Direct
If you’re using our API or Chargify Direct to get your customers signed up and to collect payment info from them, here’s what you’ll do to get them paying via ACH:
1. Your customer signs up for your product and enters bank info right then, OR they sign up and then later give you bank info on a separate payment update form (if you do that). Either way, you can submit bank account info to Chargify when you create or update the customer record or payment profile record.
From that point forward, your customer will pay you via ACH. If there is ever any change to the recurring amount or timing, you will need to notify your customer, telling them of the new arrangement.
As mentioned earlier, this is clearly a faster and easier process for you and for your customer, but it comes with the caveat that it’s your responsibility as the merchant to know your customer and to trust them with bank account info.
Bank Account Security vs Easy On-Boarding
You’ll notice that we did not make any system using our hosted pages that allows bank account info to be entered by a brand new customer on a public-facing signup form.
We decided that allowing bank account info to be entered by a brand new customer on a public signup form is too risky. You should not do that, either. Make sure that your user/customer flow is such that you build up some knowledge of your customer and some trust before accepting bank account info from them.
ACH Payment Flow with the Chargify Admin Panel
There is a third path of sorts: As with credit cards, you can enter ACH bank account info directly into your customer’s payment profile in the Chargify admin panel.
This assumes that you already have a customer in Chargify and you need to get their payment info offline, such as over the telephone, via fax, in person, etc.
While this is possible and can help in some special customer support circumstances, that’s all it’s meant for – special customer support circumstances.
Unless your organziation is PCI compliant itself, you are not supposed to handle payment info, especially in totally open, unencrypted form, so please do this sparingly or not at all. We know there are sometimes customers who refuse to work any other way.
Multiple Payment Profiles
As part of getting ACH done, we’ve introduced a much nicer way to allow your customers to have multiple Payment Profiles. This usually means multiple credit cards, but that’s not all.
Your customer can have credit cards AND bank account info on file. You or they will simply choose which profile is THE payment method being used.
Here’s an example:
Retries When ACH Payments Fail
ACH guidelines dictate tighter rules for retrying failed ACH payments (versus credit cards). So we created a separate dunning/retry system for ACH payments. You will set up a different retry schedule and emails for customers paying via ACH.
Note that the guidelines do not allow you to try more than 3 times, and after 3 failed attempts, we must forever stop trying to collect on that arrangement. Basically, if your customer cannot pay after 3 tries, you will no longer be able to try – you will need to go back to them and start over on that particular payment plan.
Here are your ACH Dunning/Retry Settings:
Emails when Anything Changes
ACH guidelines require you to notify your customer if there is any change to the recurring amount to be taken, or to the date that it will be taken. In other words, any change at all since you last notified them of what to expect.
We also recommend that you turn on the Upcoming Renewal Email in your Site Settings. This is an email we can send (if turned on) to your customers, telling them how much they will be charged, a few days before they are charged.
The point is, bank regulations are all about making sure your customer knows what to expect before any money comes out of his or her account.
ACH has been a big request for a long time. We’ve done a ton of work in many parts of our app to add ACH, and we know there will be more as we get feedback and refine this.
But we’re really excited to get this out! It should really alleviate some pain that a lot of our merchants have been feeling in their businesses.
If you need anything, please call us at (800) 401-2414 or send email to firstname.lastname@example.org
Thank you for your continuing business, which allows us to keep growing a profitable company and deliver more and more of what you need!
More to come…