Ach (also known as the Automated Clearing House) and EFT (Electronic Funds Transfer) are both electronic methods which transfer financial transactions between two parties. The ACH system, initiated in 1974, is used for daily consumer banking transfers to receive or make payments. EFTs originated decades earlier with direct deposit for payroll; this system has since expanded to service almost all of our financial transactions.
ACH, like most payment systems, works using a universal electronic “batch” process: the sending and receiving parties upload their information (invoices, etc.) into an online portal; this information is matched up with that of the other party; then it gets submitted as a group to the ACH “clearing house” for verification and processing. On average, it takes between 1-2 days for payments to process after they are submitted into the ACH system.
Because of their ease of use, EFT has become incredibly widespread among service providers across industries, including healthcare services. The EFT system works by allowing customers to securely transfer funds from their account directly into the service provider’s account. The customer inputs the service provider’s bank account information, which gets automatically transferred. The principal advantage of EFT is that it has a faster processing time than ACH - usually within minutes after transferring the funds. This fast time frame makes it easier for customers to fulfill expenses that happen at any given moment or in real time, making it especially useful in the healthcare field.
The downside of EFT is its security risk. Because transfers are made between individual bank accounts, there’s potential for disaster when employees have access to this information. Companies can protect their data by requiring employees to use their own bank cards and accounts for EFT transactions and employing software which secures the data of all parties involved.
ACH vs. EFT: your choice depends on your priorities, but you can avoid making a costly mistake by choosing an electronic payment system that safely allows both your customers and staff members access to transfers.
