How To Protect Yourself When Using Ach Processing

By Author: Michael Smith
Total Articles: 268
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As an online merchant, accepting credit card payments or electronic checks using remote deposit capture come with the very real risk of chargebacks. A chargeback happens when your customer decides to dispute the ACH debit. ACH processing is the type of processing that a business can utilize for the purposes of debiting a customer.

There are a lot of businesses that use this form of processing because it really streamlines the payment process and allows a relaxed and steady income flow. Any customer or business that is paying you through ACH processing has a period of protection; if the customer contacts their bank within 60 days of the transaction and reports that they have been debited without their express permission, the funds will be reverted back into their account.

There are two ways that a customer can chargeback their payment. First, they can call the bank and tell them that the ACH charge was not authorized by them. They can say that they never gave you permission to debit their account. Second, a customer can simply revoke the authorization. This means that they initially gave their permission for ...
... the charge, but now they have changed their mind, for whatever reason. An example might happen like this: the customer ordered a product from your company, but when it was delivered to them they found that it was not quite up to their expectations. If they paid via ACH or by remote deposit capture, they can talk to their bank and tell them that they would like to revoke the previous authorization. The bank will deposit the paid amount into the customer's bank account and then bill the ACH processing company for the same amount. The ACH processor would then bill the company (you).

It's not uncommon for a customer to chargeback with the intention of committing fraud. Products and services may be rendered well but a customer might simply not want to pay for them. The only way you can protect yourself against this is by having your customers sign a debit agreement to show proof of transaction. Whether through ACH or remote deposit capture or transactions done over the internet, you can have a record of the IP address and the final agreement.

If you don't have authorization, or if you have no record of the agreement, you won't be able to overturn the chargeback. That's why it's extremely important to keep yourself protected in all forms of e-commerce. The threat of a chargeback is very real, especially if you accept payments through ACH processing or remote deposit capture. Keep these things in mind to ensure that your business doesn't fall victim to any form of customer fraud.

ACH processing is one of the easiest methods of doing business. Using remote deposit capture can make customers feel comfortable with their purchases.