Financial services company Plaid announced Thursday (May 20) it has formed a partnership with Square to help U.S merchants process automated clearinghouse — ACH — payments without having to hold onto sensitive banking info.
“Now merchants can accept ACH payments through Square Invoices and developers can enable ACH payments through Square Web Payments SDK, without worrying about bank authentication or any managed payment complexities,” Plaid said in a blog post.
It works like this: Square employs a tokenized check system that uses Plaid to connect customer bank accounts for bank payments. The system has a verification option that lets customers enter their bank login credentials to connect to an account and allow for payments.
The companies say this will allow businesses that collect payments on high-value orders more certainty when making collections. Square also offers fee-free refunds on the ACH payments they process for easier ACH acceptance.
As Plaid notes in the blog post, many eCommerce businesses rely on ACH for a lower cost and more accessible alternative to credit cards. But despite the benefits of ACH for merchants, many customers still prefer the convenience of using a card.
“Payment flexibility, security, and transparency are core to Square’s Payment Platform. By offering ACH payments, we can help businesses process large transactions online at a low cost without worrying about bank authentication, compliance, or any managed payment complexities,” said Dennis Jarosch, head of Square’s payment platform. “We’re excited to offer ACH as one of many ways that businesses get paid fast and securely with Square.”
Square announced last month that businesses could use its Square invoices service for ACH payments. The service is free for Square merchants. The company says ACH transactions come with a 1 percent processing fee and “no hidden fees for failed ACH transactions.”
The recent PYMNTS Payment Rails Innovation Roundup has more on developments to ACH and other payment services.