Breadcrumb

ACH vs Cheque: Which Is Right for You?

Written by

The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedJun 20223 min read

An ACH payment is a type of electronic bank-to-bank payment made via the ACH network. It is used for moving money across and within the United States in US dollars. However, UK-based companies that conduct businesses in the States can benefit from being able to collect ACH payments.

Cheques, meanwhile, are a more traditional form of payment. It involves the payer manually filling in details on a paper cheque from their cheque book, including the payee’s name and the amount that should be sent.

In this post, we’ll define ACH payments and cheques in more detail, outline how you can collect ACH payments in the UK, plus help you decide which payment methods your business should accept.

ACH vs cheque payment

ACH stands for Automated Clearing House. It is a network used for electronically moving money between bank accounts within the US. It’s run by an organisation known as Nacha (National Automated Clearing House Association), however it also goes by the names ACH network or ACH scheme.

An ACH payment is an electronic bank-to-bank payment in the US. It is made via the ACH network, as opposed to credit card networks such as Visa or Mastercard.

Cheques, on the other hand, are traditional forms of payment processing whereby an account holder writes a physical cheque noting the amount to be sent to a designated payee. The payee then takes the cheque to a bank or post office to initiate the transfer of funds. Although many banks now offer the option to upload photos of cheques to your mobile banking app to avoid you needing to go to the bank.

ACH vs cheque security

When it comes to security, ACH payments is certainly the superior payment method. This is because all ACH payments pass through a clearinghouse where rules and regulations are enforced to keep account information confidential. Paper cheques, on the other hand, pass through a myriad of hands with personal information clearly displayed on them. They are therefore vulnerable to security issues. They can also be forged fairly easily.

Disadvantages and benefits of ACH vs cheque

Using cheques as a payment method in current times is not particularly advantageous. However, if your client demographic is the elderly, you may see some benefit to accepting paper cheques as a method of payment. This is because older individuals are by far the main group still using cheques to make payments.

The disadvantages of accepting cheques, however, are numerous.

For one, they are at risk of being phased out altogether. The UK Payments Council previously announced plans to phase out cheques by 2018, but reneged this decision when opponents argued that it would unfairly disadvantage older generations that still rely on the payment method.

The other issue with paper cheques is that they can take as many as 6 business days to process. This places the method at a significant disadvantage compared to instant payment options.

ACH payments, however, are also not instant payment methods either, and can potentially take more than 3 working days.

An advantage both cheques and ACH share is that both involve bank-to-bank money transfers, and do not involve either credit or debit cards. This avoids issues arising in payments due to lost or expired credit/debit cards. This can reduce the number of failed payments and save businesses time chasing up any late or failed payments.

As a UK business, it is very cost and time ineffective to accept cheques from US clients as a payment method. This is because it will likely be very expensive and take a long time to process.

Collecting ACH Debit payments from the UK used to be very expensive too, requiring a US bank account and transaction and conversion fees in order to be processed. However, GoCardless provides a solution to enable UK businesses to collect ACH Direct Debit payments directly from customers in the States. Powered by Wise, this occurs using the real-time currency conversion rate.

ACH vs cheque: which is right for you?

The choice between whether ACH or cheque is better suited to your business will depend on whether you conduct business in the US or not, and the preferred payment methods of your customers.

If you only operate within the UK or otherwise do not carry out business in the US, then there is no benefit to looking into ACH payments. Likewise, if none, or very few, of your customers wish to make payments by cheque, then it is not in your interest to accept it as a payment method.

On the other hand, businesses that operate in the States, or businesses that have a customer base that prefer paying by cheque, will benefit from exploring these two options as accepted payment methods.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.