92% of organizations change B2B payment methods to make money movement more efficient. That data is not surprising — if you make Automated Clearing House (ACH) payments at scale, you already know just how time-consuming and complicated the process can be.
Thankfully, there’s a simple solution. An ACH API allows you to convert manual processing for ACH transactions into automated payments.
With an ACH API, you will be able to do the following without any manual processing:
- Initiate new payments
- Receive incoming funds
- Track the status of your transactions.
Key insights
To help you understand what an ACH API is and whether you need one, we’ve compiled this guide to answer the following questions:
- What is an ACH API?
- How do ACH APIs work?
- What are the benefits of using an ACH API for processing payments?
- Which API provider is best for your business?
- Why would you choose Orum’s money movement API?
Let’s take a look at each one.
What is an ACH API?
ACH APIs allow businesses with high transaction volumes to develop software that automates payments across the ACH network. These APIs facilitate the initiation, receipt, and tracking of payments. To better understand how you can benefit from this API, you first need to understand the two components of this product.
1. ACH
Automated Clearing House (ACH) is a popular payment system in the United States. It has been powering a significant amount of electronic payments domestically and internationally since 1972.
While the network has been around for a long time, the system has been undergoing a variety of improvements over the last decade. You can now process payments within the same working day or in two business days for cheaper than most alternative forms of payment.
To understand all the nuances and details, check out our complete guide on ACH payments.
2. API
API stands for “application programming interface.”
An API is a tool that helps two different pieces of software interact through specific definitions and protocols. One application (known as the “client”) originates a request to another application (known as the “server”), which then returns a specific response.
ACH payment APIs
In the case of ACH payment APIs, you are connecting your company’s software to the software of your bank (or potentially to the ACH network directly).
In this case, your software (the client) could request that your bank initiate an outgoing ACH payment to one of your employees. Your bank’s software (the server) would then start that payment and send back a confirmation that a transaction was initiated, together with some other details about that transaction.
How do ACH APIs work?
While some banks offer their APIs directly, they tend to be clunky and difficult to use.
A third-party ACH API provides a simpler, faster way to connect to your bank. You can automate manual operations to send, receive, and record ACH payments in a way that best fits your organization.
For example, you can initiate 100 similar transactions at once, changing only the necessary information without manually initiating every individual payment. You can also repeat the same payment after some time, such as sending a biweekly payroll to your employees.
An API is essentially a list of specific instructions that you can execute to complete a task. Those instructions are often the same operations that your team could complete manually, but an API lets you offload those tasks instead.
4 benefits of using an ACH API for payments
Since an ACH API helps you automate payment processing, your business would benefit in these four ways:
- Streamline large volumes of ACH payments
- Save time on manually initiating and processing ACH transactions
- Automate handling of payment failures
- Automate accounting and reconciliation of ACH payments
An ACH API allows your company to grow its transaction volume without significantly increasing the associated time commitment.
How to pick the best ACH API provider for your business
Since there are many ACH API providers out there, picking the right one for your business can take time and effort.
Types of ACH API providers
ACH API providers tend to fall into three main categories:
1. Direct bank integration
Direct bank integration is the seamless connection between a company's systems and a bank's infrastructure through an ACH provider. This integration allows for direct access to banking services and functionalities. While this solution may seem like a simple option, bank APIs are often slow and difficult to integrate — leading to long integration periods and costly resourcing.
2. Banking as a service (BaaS) providers
BaaS providers offer banking-related services to businesses, including ACH processing, without the need for these businesses to set up their banking infrastructure. These companies provide general financial solutions, such as issuing cards, creating bank accounts, etc.
3. Money movement APIs
Then there are API providers focused on moving money, such as Orum. Money movement APIs often integrate with more than one payment network, so you can accept multiple payment rails, such as ACH and RTP, or send wires. Some APIs even orchestrate the money movement — optimizing for speed and cost — while also verifying bank accounts, making it easy to get set up.
Key ACH API considerations
To choose a specific API for ACH payments, you should consider why you need such a solution in the first place.
How would automating ACH payments benefit your business? What pain points are you trying to solve?
Some potential considerations include:
- Volume: How many transactions do you need to process now, and how much do you expect to scale that volume in the future?
- Direct vs. Indirect Integration: Does your bank already provide an ACH API? Do you have the time and resources for a longer integration timeline?
- Difficulty of Integration: How quickly could you get up and running with a particular API? How difficult would it be to make any changes to your integration as your needs might shift?
- Support and Documentation: How much support will you get from an API provider? Do they provide guides, tutorials, or live support?
- Maintenance: How much maintenance would this API require over time, and do you have enough developers to handle those tasks?
More than anything, you need to make sure that integrating with a payment API would help your business. Ask the people whose tasks you’d be automating for input:
- What tasks are the most time-consuming and frustrating?
- Are they spending a lot of time and effort on processing ACH transactions?
- What kind of processes are the main bottlenecks (reconciliation, approving payments, processing payroll, allowing customers to make payments online)?
The advantage of using Orum’s ACH API
At Orum, we provide a modern API solution for ACH payment automation.
Our product has three key areas of focus:
- Ease of integration
- Speed of money movement
- Solution discovery
1. Ease of integration
The first key area for Orum’s ACH API is its ease of integration. We understand that you need a payment API to make your life easier. As such, Orum will avoid adding additional workload for your development and finance teams. Instead, we provide an intuitive API with supporting materials to minimize integration time and effort. We make it easy to get set up in two weeks or less with informed support each step of the way.
2. Speed of money movement
The second key area is the speed of money movement. We help you move money as fast as possible. Our API handles ACH orchestration to ensure you can access same-day ACH processing whenever possible instead of slower standard ACH payments.
3. Solution discovery
The last key area is solution discovery. When you first speak with us, we will ensure that you get set up with a solution that meets your business needs. So, our payment experts will help you determine if and how automating ACH payments would benefit your product. Occasionally, an ACH API is not the right solution, so we can direct you to better alternatives.
Money movement made easy with automation
At Orum, we’re passionate about helping you move money via ACH, or any payment rail, without the hassle and risks you may face by initiating those transfers yourself.
We can automatically determine the best possible speed for your transaction, picking between same-day, next-day, and 2-day ACH. Moreover, our smart routing system can mitigate the risks of financial fraud and identity theft with any ACH transfers you conduct.
If you’re ready to implement ACH transfers into your product, get in touch!