ACH payments are a safe way to pay vendor invoices and employee payroll. According to data from NACHA fewer than 0.03% of ACH transactions are returned as unauthorized. ACH remains the preferred payment method for accounts payable departments to pay their vendors. ACH payments grew to 26.8 billion transactions in 2020 (a 8.2% YOY increase) according to NACHA, the organization that oversees ACH activity. But how safe are ACH payments compared to other methods? Keep reading to find out.
With only one third of a percent of all payments being return, ACH provides a high level of safety by any standard despite rising concerns over cyber security. Of course, that doesn't mean zero risk. While ACH payments tend to be very safe for the payer, the vendor is the one who is often sharing their sensitive info. The good news is, there are a few steps you can take to assure your vendors that their banking info is protected. Making your ACH payments safe is not only good for vendor relations, it protects you against liability for fraud. Here are some tips to ensure your ACH payments are safe for you and your vendors.
ACH payments are safe for you but you can make them safer for your vendors. Here's how...
Bank account numbers and routing numbers can be used to access funds. Instead of emailing your vendors or collecting this info by phone, set up a secure portal where vendors can enter their banking information so your team never has to lay eyes on the data. This way, vendors aren't sending sensitive data over less secure platforms like email. Vendors should also be able to manage their info through this portal when (or if) they need to make updates.
To make sure your ACH payments are secure, it is best to store data in encrypted servers that comply with highest industry standards of security (SSAE Type 16, SOC 2). Never store this data on local hard drives and it's best if you don't store it on your local servers either. Opting for secure 3rd party storage tends to be the most secure route.
Sending ACH files via SFTP will make sure your ACH payments are secure end-to-end. Enable audit traceability for all transactions, and again, remove human eyes from ever seeing banking info to ensure the file can't be edited en route to the bank.
Not only are ACH payments more secure than wire transfers, they are also less expensive. In most B2B payments situations, ACH is the better option compared to Wire Transfer. The exception being that ACH is only available within the U.S., while Wire Transfers can cross international lines. Wire Transfers are also faster for rare occasions where funds have to be transferred immediately. But when security is the primary issue, ACH is safer. Learn more: Wire Transfer vs ACH Transfer ยป
In general, there is a higher level of fraud protection for credit card transactions in the U.S. Another benefit is that a potential credit card fraud incident won't directly deplete your operating capital. However, when paying in bulk, it might not be in your company's best interest to process dozens, hundreds or even thousands of transactions on a credit card each month. What's more, credit card payments add an extra layer of accounting process as you will eventually be paying that credit card bill, presumably through check or some form of EFT such as ACH.
A check is safer for the vendor since it requires none of their banking info. However you are putting a hard copy of your bank account and routing numbers in the mail, which is not so secure. If you want to prevent check fraud when you do have to use checks, learn about positive pay.
Fidesic AP is the go-to accounts payable automation solution for Dynamics GP and simplifies ACH with higher levels of security. Here's why Fidesic is different: