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Guide to Recurring ACH Payments

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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 editedJul 20222 min read

If you’re looking for a way to collect recurring payments from customers living in the United States, you may be frustrated by the high fees and lengthy transfer times that card payments and wire transfers present. Recurring ACH payments provide an efficient, cost-effective alternative – here’s what you need to know.

What are recurring ACH payments?

Recurring payments are authorised by a customer to be taken automatically at regular intervals. Suitable payment methods can be a bank transfer, debit card, or credit card, with fixed or variable amounts taken at a predefined date. In the case of recurring ACH payments, these payments are taken directly from the customer’s bank account and transferred into the business’s bank account using the Automated Clearing House (ACH) network.

Based in the United States, the ACH handles large volumes of transactions which are batched together throughout the day for processing. Examples of typical ACH payments include direct deposit and payroll, but they can also be set up for recurring or subscription payments. Examples might include utility bills, gym memberships, subscription services, and SaaS products.

Can UK businesses take ACH payments?

The ACH network is the US’s national clearinghouse for electronic bank-to-bank funds transfers, so is it even possible for UK businesses to access this system? Yes, but it can be complicated. In the past, any international merchant who wanted to collect recurring ACH payments needed to open a US bank account to qualify. This involves high transaction and conversion fees, eating into a business’s bottom line.

Today, UK businesses can collect ACH direct debit payments directly without a US bank account via payment gateways like GoCardless. These take payments in USD and settle them in GBP. However, one thing to note is that you’ll only be able to take ACH payments from customers with US bank accounts as the system will not work in other countries.

How long does it take to process an ACH payment?

When a UK business takes an ACH payment, it does take some time for processing – typically up to a week for the transfer to be completed within the US, and then between one and five more days for the payment to reach the UK. You can arrange payments in advance while keeping these timelines in mind to minimise any disruption to your cash flow.

What are the advantages of recurring ACH payments?

Customer churn is a very real problem for any business, particularly those who take recurring or subscription payments. Churn rate measures the number of users that cancel a service. While some do this intentionally, many customers unwittingly discontinue service due to failed payments. This is called involuntary or payment churn and is usually caused by cancelled or expired credit cards.

Customers don’t always remember to update their payment details when they receive a new debit or credit card. When a business tries to run through a recurring payment using this expired payment method, the payment fails. This can cause delays to a customer’s service, or they may not ever restart the subscription.

One of the major advantages of taking recurring ACH payments is reduced churn rate. Because the customer’s service is linked to a bank account, recurring payments are far more likely to go through as planned. For example, GoCardless customers report 51% fewer late or incorrect payments, with 97% of payments successfully collected on the correct date. Using GoCardless’s pull-based direct debit method, the merchant retains full control over payment timings and amounts. UK-based businesses can collect recurring ACH payments from US-based customers without any need to open a US bank account. A further advantage is that businesses benefit from real-time currency conversion rates, powered by Wise.

With real-time currency conversion rates and reduced churn, recurring ACH payments are an attractive alternative to card payments and wire transfers. It’s a simple, streamlined way to collect payment from your US customer base.

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.