What is an ACH Payment?

ACH stands for Automated Clearing House. An ACH payment is an electronic credit or debit transfer that enables HOA members to pay assessments online from their bank accounts. Most payment processors offer ACH debit options to their customers, especially for monthly- and subscription-based transactions. In general, HOAs prefer to accept ACH payments from their members rather than debit and credit cards.

Paying HOA Dues Via the ACH Payment Method

ACH, or echeck processing, leverages innovative technologies that allow homeowner associations to accept echecks for HOA dues via the web. A payment processor is a merchant-appointed company that handles ACH payment processing services for HOAs. The timesaving provided by the ACH payment method enables them to focus on their core business and avoid the hassle associated with manual payments.

ACH Payment Processing: Electronic Payments Save Time and Money

DuesPayment is focused on delivering the convenience of electronic payments by offering multiple payment solutions and payment methods, including ACH payment processing options. DuesPayment differentiates itself with an innovative API payment solution combined with extensive vertical experience and expertise. Partnering with DuesPayment means your ACH processing is in good hands.

How Does ACH Payment Processing Work?

ACH payment processing for HOA dues usually takes a few seconds yet there are a number of steps involved in completing a successful transaction:

Step 1: Member Initiates Online Payment via ACH

The HOA member engages with information presented on duespayment.com, or the DuesPayment payment app in order to pay HOA dues. The member chooses the ACH payment method and provides information such as name, checking or savings account number and bank routing number before submitting a payment. This sets in motion a series of backend processes.

Step 2: Payment Gateway & Merchant Account

The DuesPayment payment gateway, the front end and interface for ACH payment processing of eChecks, forwards the transaction details comprised of the name, checking or savings account number, routing number and the amount to its merchant acquirer, also known more commonly as the payment processor.

Step 3: Payment Processor & ACH Network (A)

The payment processor (merchant acquirer) validates payment details for HOA dues by having its bank, known as the Originating Depository Financial Institution (ODFI), send them through the Automated Clearing House (ACH) network via an ACH file. The details are then relayed to the member’s bank for verification.

Step 4: Member’s Originating Bank

The member’s bank approves or denies the payment transaction based on the accuracy of the bank information submitted. The bank then sends the ACH file back to the ACH networks. If the payment for HOA dues is approved, the member’s bank sends the funds to the ACH network less interchange fees.

Step 5: Payment Processor & ACH Network (B)

The ACH network relays the transaction information along with the approved/denied status back to the payment processor and forwards the money via the ACH file less the assessments fee. The payment processor’s merchant acquiring bank sends money in good faith to the payment gateway to process. In the meantime, the processor attempts the direct payment transaction via ACH credit or ACH debit and waits for reimbursement from the member’s bank. This can take up to 5 business days to clear depending on bank processing time. The Electronic Payments Association, formerly known as the National Automated Clearing House Association (“NACHA”), requires that ACH credits settle in one to two business days and ACH debits settle on the next business day.

Because verification of funds is not immediate, the payment processor bears the risk of insufficient funds occurring. In that event, the member’s bank, which usually credits the merchant acquiring bank, recalls the funds and charges a non-sufficient funds (NSF) fee. The payment processor, in turn, charges the payment gateway and the payment gateway is forced to charge the merchant who typically passes the fee to the member. This NSF fee originally charged to the payment processor is separate and independent of the NSF fee charged to the member by the bank.

Step 6: Payment Gateway & Merchant Account (B)

DuesPayment’s payment gateway notifies the member by forwarding the transaction approved/denied status via the online payment interface. In the event the payment for ACH dues is rejected, DuesPayment’s payment gateway relays this information back to the site or app and ACH payment processing is halted.

Step 7: Payment Via Merchant Receiving Bank

Now the money needs to be moved from the merchant acquiring bank account, known as the Receiving Depository Financial Institution (RDFI), to the HOA’s bank account. If the HOA is a partner and has a sub-merchant account with DuesPayment, the payment gateway disburses the net payment into the account of the HOA’s bank. Once ACH payment processing is completed, the member is notified that the payment went through and is shown a confirmation screen. Typically, a receipt is emailed to the member and reports are updated in real time showing that a payment for HOA dues has been made.

Why Accept ACH Payments with DuesPayment

With DuesPayment you’re considered a valued partner not a customer. We’re convinced that building a relationship with you is to our mutual benefit. Working together, we get your valued business, and you get our extensive industry expertise in leveraging online payment methods for collecting HOA dues.

HOAs large and small accept ACH payments through DuesPayment. Considering we processed millions of electronic payments in the last year, we are well are on our way to changing the way the world pays.