ACH and e-Transfer vs Card Payments: When to Use Each

How bank payments work

ACH in the US moves money between bank accounts through the ACH network. In Canada, pre-authorized debit lets you pull payments from a customer's account with their signed authorization, and Interac e-Transfer lets customers push money to you by email or phone. None of these run on the card networks, so interchange does not apply.

Cost

Card payments cost a percentage plus a fee, so the cost grows with the amount. Bank payments are usually a flat fee or a small capped amount, which makes them far cheaper on large invoices. On a small retail sale the difference is modest; on a large invoice it can be significant.

Speed and returns

Bank payments can take a few business days to settle, although faster options exist. ACH and pre-authorized debits can be returned, for example for insufficient funds, sometimes days after you thought the payment had cleared. Plan your delivery or service around that risk for large amounts.

Disputes

Card customers can dispute through chargebacks. Bank payments have their own return and dispute rules, generally narrower than card chargebacks but still real for unauthorized debits. Keep signed authorizations for any debit you pull.

Authorization and records

For recurring bank debits, get written authorization that states the amount or how it is calculated and how to cancel. In Canada, pre-authorized debit agreements follow Payments Canada rules that your provider will explain. In the US, ACH debits follow Nacha rules.

When to use each

Use cards for walk-in sales, small tickets, online checkout and customers who want rewards or chargeback protection. Use bank payments for large invoices, rent, tuition, memberships where customers accept it, and business-to-business billing. Many businesses offer both on every invoice and let the customer choose.

Passing on card costs instead

Some businesses offer a discount for bank payment instead of adding a card fee. Discounts for other payment methods are generally more acceptable to customers, and in Canada are expressly allowed under the Code of Conduct, but check the rules where you operate.

An illustrative comparison

Consider an illustrative $5,000 invoice. Paid by a rewards credit card at an effective rate of 3%, it costs $150 to accept. Paid by ACH at an illustrative flat fee of a dollar or two, it costs almost nothing by comparison. On a $15 retail sale, the gap is only a few cents, and the card's speed and convenience win. These figures are made up to show why bank payments matter for large invoices and less for small sales; ask your provider for your own rates.

Business-to-business billing

Businesses paying other businesses often prefer bank payments for large invoices, and many have accounts-payable processes built around them. Offering ACH or pre-authorized debit alongside cards on every invoice lets your customers choose, and many will choose the bank option for large amounts. When they do pay by corporate card, sending Level 2 or Level 3 data can lower the card cost.

Recurring payments

Memberships, rent, tuition and service plans are good candidates for bank debits, because the amounts are predictable and the customer relationship is ongoing. Cards are still useful for customers who prefer them. Card-on-file billing needs account updater to keep working when cards are reissued; bank debits need a process for returns.

Interac e-Transfer for business

Interac e-Transfer lets customers send money from their bank by email or phone. For businesses it is common for invoices and deposits. Check your bank's business e-Transfer features, limits and fees, and consider auto-deposit so payments land without a manual step. Because the customer pushes the payment, there is no card-style chargeback, although fraud and scams remain a risk, so confirm who is paying.

Fraud and verification

Bank payments have their own fraud patterns, such as payments from accounts that are later reported as unauthorized, and scams asking you to refund an overpayment. Verify new customers, wait for large payments to clear before releasing goods, and never refund an overpayment to a different account.

Reconciling both

If you accept cards and bank payments, reconcile them separately: card deposits come net or gross of card fees on the processor's schedule; bank payments arrive individually. Most accounting tools can match both if invoices carry a clear reference.

Settlement timing in practice

Card payments usually reach your bank in one or two business days, depending on your provider's funding schedule. Standard ACH typically settles in one to a few business days, and faster options exist for an extra cost. In Canada, pre-authorized debits follow a similar pattern, while e-Transfers usually arrive quickly once the customer sends them. Plan cash flow around the method, especially at month end.

Customer experience

Customers paying invoices appreciate a single link that offers both card and bank options. For recurring payments, make the authorization simple, confirm each debit by email, and make cancellation straightforward. A customer who understands what will be debited and when is less likely to dispute it.

Questions for your provider

What does each bank payment cost, and is there a cap? How long does settlement take? What are the return fees, and how are returns reported? Can bank payments and card payments appear on the same invoice and reconcile to my accounting software?

Moving customers to bank payments

If you want more customers to pay by bank, make it the easiest option rather than the only one. Put the bank payment button first on invoices, explain that it helps keep prices down, and offer autopay for recurring bills. Some businesses offer a small discount for bank payment where that is permitted. Forcing customers off cards tends to cause friction; giving them a simple alternative usually works better.

Security of bank details

Bank account details are sensitive. Collect them through your provider's secure form or portal rather than by email or phone, store only what you need, and restrict staff access. Treat changes to a customer's or supplier's bank details with suspicion and verify them by calling a known number, because payment-redirection fraud usually starts with a change-of-details email.

Setting it up

Most providers and invoicing tools can add ACH or pre-authorized debit alongside cards. Ask about per-payment cost, settlement time, return fees and how returns are reported.