The use of high risk ACH processing has been part of the payment processing industry for more than 40 years, being the first system set in place to accept direct payments from a customer's bank checking account. As an alternative to credit card processing, the ACH system has been one of the leading payment acceptance methods after credit cards.
The ACH system, also known as the Automated Clearing House, is a system used to make a variety of different payments, including business to business and business to customer. The current ACH system is one of the largest payment networks in the world, handling over 24 billion domestic and international transactions a year valued at over $41 billion dollars.
Once a payment is established, either a direct deposit or and ACH payment, the information is electronically sent to the originator be authorized and settled. Once received at the ACH orginator, transfers are sent from the financial institution to the ACH Operator, either the Federal Reserve or the Clearing House, for sorting and eventually fulfillment of either the debit or credit to customers bank account. Credits are normal viewed within 2 business days from the request, while debits are visible within 1 business day of the request, similar to the time a high risk credit card processing transaction takes to settle.
While high risk ACH processing is possible, the Federal Reserve guidelines for chargeback and returns tolerance are much lower than that of a high risk check processing service. Though there still are some payment processors that will work with the ACH service for high risk, most have switched over to echeck processing due to guidelines that are more liberal for higher risk merchants.
The use of ACH processing is still a possibility for merchants in the high risk industry, but the use of the services is not always suggested. Similar to a high risk merchant trying to use a domestic merchant account for their business when a high risk merchant account solution would be recommended, merchants trying to accept checks should consider a high risk check processing service instead of ACH.