How to Pay Less Credit Card Fees – FreshBooks ACH
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Do you hate accepting credit card payments because you don’t want to pay the transaction fees? Have you tried to avoid transactions fees by only accepting cash or checks as methods of payment? If you answered ‘yes’ to either question, then you’ll want to check out FreshBooks’ latest feature, ACH Payments. When using this accounting and invoicing tool, you can now accept ACH payments, which means you get paid faster and transaction fees are lower. Win-win!
Make it easy for clients to pay you sooner!
What is ACH?
ACH stands for Automated Clearing House. Do you want to how the technology works? I’m guessing not…
All you need to know is that with FreshBooks’ ACH, you can allow your clients to pay invoices directly from their bank account. And because this process is easier and more affordable for FreshBooks, you will also benefit.
FreshBooks Invoice Example – Customer can select to pay by Bank Transfer or Credit Card
3 Benefits for Small Business Owners to Accept ACH Bank Transfers:
How will you benefit from offering ACH payments?
- Faster Deposits – When clients use ACH to pay their invoices, funds are automatically deposited into your bank account and marked as paid in FreshBooks.
- Note: You may see the status as “Processing” when you view your FreshBooks invoices until processing is complete.
- Convenience – Allowing clients to pay via bank transfer online, it’s faster and more convenient for both you and your clients. You eliminate the hassle of writing a check, getting an envelope and stamp, and physically mailing the check.
- Real-life Story: One of my clients had issues with customers mailing their checks to the wrong address! It took time to follow-up with customers, get their check numbers, and follow-up to find his “lost” checks.
- Less Expensive – The fees for an ACH transfer is only 1% versus the typical 2.9% + $0.30 transaction fees for credit cards.
- Note: American Express processing fees are usually higher, i.e. 3.5% + $0.30 transaction fees.
*Important Note: ACH payments are only available to U.S. customers.
FreshBooks Credit vs. ACH fees
Examples: How Much Do Credit Card Fees Cost Your Business?
Let’s look at how the transaction fees can really add up by comparing the fees when your client pays an invoice via FreshBooks Payments (with credit card) or via ACH (bank transfer).
Example #1: You bill your client Tessa Test for one coaching session at $150.
Scenario 1: Tessa uses her Chase Visa credit card to pay the $150 invoice.
- Credit card fees: ($150 x 0.029 ) + $0.30 = $4.65
- Amount that is deposited into your account: $150 – $4.65 = $135.35
Scenario 2: Tessa uses her Capital Bank checking account to pay the $150 invoice.
- ACH fees: ($150 x 0.01 ) = $1.50
- Amount that is deposited into your account: $150 – $1.50 = $148.50
Difference: If your client selects ACH transfer, you receive $3.15 more than if she uses a credit card.
Is $3.15 really that much of a savings??
Perhaps you are thinking that $3.15 isn’t a big deal. Let’s take a look at another example where the billed services are higher.
Example #2: You bill your client Billy Test for one coaching session at $1,000.
Scenario 1: Billy uses his Chase Visa credit card to pay the $1,000 invoice.
- Credit card fees: ($150 x 0.029 ) + $0.30 = $29.30
- Amount that is deposited into your account: $150 – $4.65 = $970.70
Scenario 2: Billy uses his Capital Bank checking account to pay the $1,000 invoice.
- ACH fees: ($1,000 x 0.01 ) = $10.00
- Amount that is deposited into your account: $1,000 – $10.00 = $990.00
Difference: If your client selects ACH transfer, you receive $19.30 more than if he uses a credit card.
$19.30 is a nice size savings…and multiply that savings by the number of clients you have, and you could be saving hundreds of dollars each month by using FreshBooks new feature, ACH.
How Quickly Will Money Show Up in My Bank Account?
FreshBooks says to allow for 2 – 3 business days for payments to land in your account after the payment is successfully processed.
When I did a test transaction pretending to be a client who paid an invoice via ACH bank transfer, I got a message stating that “This payment may take 2-4 hours to complete processing.” So, it looks like it may be possible that depending on your bank and your client’s bank, you could potentially get the funds deposited the same business day?
Example: Client has paid invoice.
Summary: Get Paid Faster and Pay Less Credit Card Fees
If you accept cash or checks, you are probably taking time from your business to drive around to pick up payments and spending time going to the bank to cash the checks. Save yourself the time and get paid faster by using the ACH Payments feature of an accounting and invoicing tool like FreshBooks.
With this new ACH feature, FreshBooks enable your clients to pay invoices sooner (from the convenience of their home / office computer), and helps you decrease your operating expenses by lowering your transactions fees to only 1%…which is a savings of over 1.9 – 2.5%!
Get started now with a free trial of FreshBooks.
How much are you paying in processing fees? Do you still accept checks or cash?
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2 Comments. Leave new
Thanks for the post. Nice tip. I gotta ask, why not just give the client the Bank account routing number and avoid all kind of fees? I just started using FreshBooks and they don’t even have a field in their invoices to add Bank details, they just want to channel you to their payment system to get fees.
Thanks for reading and sharing your feedback, Issak! One drawback of just doing a bank transfer is covered in this post “Hassle in Paying by Cash or Check.”