Why are the fees different for ACH and credit card payments?

Read below to learn how credit card fees differ from ACH fees.

ACH vs. Card Fee

ACH and credit card fees differ based on their respective payment methods. The ACH fee is a flat rate of $5, while the credit card fee is calculated as 3.19% of the payment amount.

ACH Fees

ACH (Automated Clearing House) transactions involve electronic fund transfers between bank accounts. ACH transfers are slower, typically taking 3 business days to process. This is a more cost-effective option for businesses as it bypasses the intermediaries involved in credit card transactions. Since ACH fees come with a fixed rate, the fee will remain the same regardless of the payment amount.

Credit Card Fees

When customers use credit cards to make purchases, transactions are completed almost instantly. Payment processors apply fees to account for processing fees, network charges, security measures, and infrastructure expenses. Credit card fees are usually higher because credit card companies offer extra services and safeguards against fraudulent activities.

 

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