A Short Guide to Payment Gateways and ACH Payments

When you first start ecommerce research, It’s easy to get confused. Yes, the information is readily available, but sometimes, it’s puzzling, technical, and even contradictory. For example, you probably know you need a merchant account so that you can accept credit cards from your customers. But then you start to hear about networks, gateways, clearing houses, and all sorts of jargon. This short guide should demystify these terms.

  • Payment gateway: A payment gateway is the bridge between the Internet and the traditional banking network.  When a customer enters their credit card on a website, the payment gateway transmits the information to the banking network, and then transmits back the result of the transaction, letting the merchant and customer know whether the transaction was approved or not.
  • ACH: ACH stand for Automatic Clearing House. This is the network used to transfer money between banks, thereby enabling electronic withdrawals and deposits. Often, when people say ACH, they mean electronic checks.

Bank to bank transactions

This term is sometimes used to refer to eChecks or ACH payments. Your customers authorizes their bank to release funds directly from their bank account to yours.

Many people use the words eCheck and ACH interchangeably. They’re similar, but not exactly the same. An eCheck, just like a paper check, is issued by the customer and processed by the bank. An ACH payment is pre-authorised by the customer who makes an agreement to pay you either on a single occasion or regularly.

For your business to accept credit cards, eChecks, and ACH payments, all you have to do is find a payment processor that offers  all three services. Many good ones do, but you should double-check other aspects of your prospective payment processor, such as their pricing, turnaround time, encryption levels, and their policies on things like ‘high-risk’ business, bad credit, and prior bankruptcy.

For more information on payment gateways, ACH, and accepting credit cards online, or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.


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