ACH API

92% of organizations who are changing their B2B payment methods are hoping to make moving money more efficient. That’s not surprising: if you are making 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. To free your team from manually processing every single ACH transaction, you can automate those payments with an ACH API. 

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?

To understand how you could benefit from an ACH API, you first need to understand the two underlying pieces of such a product: the ACH network and API.

ACH

Automated Clearing House or ACH is a popular payment system in the United States. It’s 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.

If you’d like to learn more, we’ve also written a detailed guide on ACH payments.

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 APIs

In the case of ACH 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 initiates an outgoing ACH payment to one of your employees. Your bank’s software (the server) would then start that payment and send back 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, those APIs tend to be clunky and difficult to use. 

So, 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. Or you can repeat the same payment after some period of time, such as sending 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.

 

What are the benefits of using an ACH API for payments?

Since an ACH API helps you automate payment processing, your business would benefit in these three ways:

  • Streamline large volumes of ACH payments
  • Save time on manually initiating and processing ACH transactions
  • Automate handling 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 for your business

Since there are many ACH API providers out there, picking the right one for your business can be difficult.

Types of ACH API providers

ACH API providers tend to fall into three main categories:

  • Direct bank integration
  • Banking as a service (BaaS) providers
  • Money movement APIs

As mentioned before, some banks already provide an ACH API that you can use. While this solution may seem like the most simple option and could provide you with the most customization options, bank APIs are also slow and difficult to integrate with.

BaaS providers tend to offer functionality beyond just ACH payments. These companies provide general financial solutions, such as issuing cards, creating bank accounts, etc.

Then there are API providers focused on moving money, such as Orum. These APIs often integrate with more than just one payment network, so you could accept ACH and RTP or wires, etc. However, such a product is tailored only towards creating, accepting, and recording payments.

Key considerations

To choose a specific ACH API provider, 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 would you wish to process now, and how much do you expect to scale that volume in the near future?
  • Direct vs. Indirect Integration: does your bank already provide an ACH API? If so, 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 actually help you. 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 full-featured API to help you automate your ACH payments.

Our product has three key areas of focus:

  1. Ease of integration
  2. Speed of money movement
  3. Solution discovery

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, we 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. 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.

The third and 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’s needs. So, our payment experts will help you determine if and how automating ACH payments would benefit your product. Occasionally, an ACH API actually is not the right solution for you at this stage, so we can direct you to better alternatives.

 

Conclusion

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!