Is ACH a Secure Payment Option?

In 2020, ACH moved financial transactions worth more than $60 trillion, a number that has been steadily rising for the past 40 years. More businesses opt for it as their preferred method of payment because it’s ideal for recurring, automated, and batched payments, among other benefits.

Even though it has been in use for decades, the concern about its security is common. Though the ACH payments network is not regulated by the same security protocols as credit cards, NACHA (National Automated Clearing House Association) and some of the best ACH payment processors build their platforms to adhere to those various measures.

In a short few years, everyone will be using it in one way or the other. Cash theft and payment errors, such as misused credit card information, bounced checks and wire transfers sent to the wrong recipient still happen and can have a huge financial impact. Therefore, it’s only right that you should be worried about security of funds.

So, to rest easy, this guide will help businesses understand whether ACH is a secure payment option, and what makes it different from its alternative.

Is ACH a Secure Payment Option?

Short answer: Yes, it is. As secure as it can be.

Longer answer:

No method of payment is 100% secure, but ACH is more secure than its alternatives.

ACH’s security is a result of the strict security rules, processes, procedures and controls that ACH Network participants are required to adhere to. They are written, maintained and administered by NACHA. Some of them include implementing:

  1. Processes to protect sensitive data, such as using secured networks or encrypting sensitive data when transmitted over unsecured networks.
  2. Access controls to safeguard sensitive data.
  3. Processes to validate bank routing numbers at the time of origination.
  4. Processes to verify customer identity when processing transactions.

Despite being more secure than the other methods of payment, ACH payments aren’t required to follow PCI compliance standards. That is why in order to be more secure, businesses should employ other layers of protection, such as:

  1. Secure vault payments to allow users to initiate ACH transactions without sharing sensitive financial information.
  2. Micro validation.
  3. Security steps such as tokenization and encryption.
  4. Supplying the routing number and bank account information to formally create individual relationships with recipients and payees.

A business that takes the above steps ensures their users’ information is safe. For customers to further protect their information, NACHA offers a list of the best tips and practices. Most of them are common sense and include:

  1. Don’t use public computers or WiFi for financial activities.
  2. Have virus protection in your computer.
  3. Don’t share sensitive information with other people.
  4. Don’t click on random unsecured links.

What is the Difference between ACH and Wire Transfer?

Even though both ACH and wire transfer money electronically, they are completely different. Here are some of their differences to help you understand them.

  1. ACH only works for domestic transfers. International transfers require wire transfers.
  2. ACH transfers can take one or more business days to be processed, while wire transfers are processed on the same business day.
  3. Funds transferred via wire can be accessed the moment they are received while funds transferred via ACH show a “pending” status until cleared.
  4. Wire transfers are significantly more expensive than ACH.
  5. Wire transfers are processed by banks while ACH transfers are processed by a clearinghouse.

Which is Safer, ACH or Wire Transfer?

ACH is safer than wire transfer. In case of fraud or error, the funds can be reversed. For wire transfer, however, the funds can be accessed immediately, and often cannot be reversed once sent.

Even though no payment method guarantees you 100% safety, ACH transfer is much safer than the others. Coupling it with a business that increases the safety layers and a customer that adheres to all the common safety rules, its security can get really close to 100%.

If you would like to improve the safety of your customers’ information, it is very easy to integrate ACH into your website or normal funding and payment processes. The best solution is to partner with an ACH payment processor with expertise in the financial industry like ACHWorks.

The ACHWorks team will help you implement ACH payment processing, increase your security and save you administrative time of funding or collecting payments.

To power your business forward, contact us to see how we can help your company leverage the benefits of ACH payment processing.