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WEB ACH vs ACH Card Transactions: Which has the greater risk?

Jan 04, 2012 Dave King

If your business involves any online sales or payments, one of the most important decisions you have to make is how to handle your financial transactions. One common question is whether web-based credit card transactions or web ACH payments are more secure and shield your company from more liability. In brief, web cards are generally a safer choice, for several reasons.  

Credit cards verify more information. 

Before a credit card transaction is approved, the account holder's name, full account number, expiry date, and (usually) SecureCode are all verified by the system. In the case of any mismatch, the transaction is rejected.

With web ACH payments, only the bank's routing number is verified beforehand. Account number mismatches are only noticed once they reach the customer's bank, a process that can take several days. Further, banks are under no obligation to verify the account holder's name at all, opening up the potential for fraudulent transactions. 

Credit card account numbers always work. 

Although cases of this are rare, a bank's routing number for web ACH transactions is not always the same as the number in the customer's checkbook. This can result in a failed transaction, with the customer baffled as to why and likely blaming you.

Credit card numbers are either right or wrong; there's no in-between.

Credit cards can verify the availability of funds.

As with the account information, fund availability is verified with credit cards before the transaction is allowed to proceed. With web ACH transactions, an insufficient fund rejection only occurs once it reaches the customer's bank, and the notification takes days to reach you.

With web ACH payments, responsibility for failed transactions usually falls on you.

If an ACH transaction fails for whatever reason, you are only informed days later, and it is up to you to re-submit the transaction or pursue legal actions against the customer. In the event of a fraudulent card transaction or NSF situation, you still get paid, and the matter is then between the customer and the credit card issuer.

So, web credit transactions are generally safer and result in more reliable payment than web ACH payments. For these reasons, if you are looking at using ACH as a payment option, it may be a good idea to investigate third-party security solutions to help mitigate some of the risks associated with web ACH payments.

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