How to Use ACH Payment APIs for Your Business

whiteboard with use apis written on it

Fintech startups require a way to safely and efficiently move money which means breaking free from the three-day payment transfer that stems from antiquated manual processes and banking systems, limiting a company’s capacity for growth. 

More and more fintech companies are using APIs for improving financial technology transfers, savings, and investing. The good news is that many of these APIs are able to find ways to improve compliance, convenience, and capability.

One of these is the ACH payment API, which fintech businesses can use to automate high-volume transactions. These APIs help make it easy to initiate, receive, and track payments, eliminating time-consuming manual processes.

This article will discuss ACH payment API integrations, how they work, and how they benefit both businesses and consumers.

What is an ACH Payment API?

An ACH API allows fintech startups to process bank transactions programmatically via an Application Programming Interface (or API)

The ACH payment API enables fintech startups to carry out ACH direct debit, ACH credit, and bank account transfers from only three separate API endpoints. Thus, eliminating the almost full-time job of initiating transfers and handling each return code and freeing up time for client management, sales, and development.

An ACH payment API offers a better way to enable bank-to-bank account transfers, similar to a credit card transaction. If you make payments with your bank account, there’s a good chance that you can make use of an ACH payment API.

How Does an ACH Transfer Work?

ACH payments are a type of electronic funds transfer used in the United States. They are typically sent from one bank account to another.

ACH transfers are used to transfer money between bank accounts through the Automated Clearing House (ACH) Network, operated by NACHA, or the National Automated Clearing House Association. This network manages money movement between banks. The sender typically initiates these payments, and they can be made in person at an ATM or through the internet.

One common ACH transaction type is direct deposits, most commonly used when business owners do payroll, so employees are paid into their bank accounts directly (hence the name, direct deposit) rather than being issued a check or cash. The ACH network includes both ACH debit and ACH credit payments. Fintech startups can use it to make a payment for a service or product and send a bill payment.

How Does An ACH Transfer API Work?

An ACH payment API is an ACH payment done through an API, allowing businesses to send and receive ACH transactions electronically. ACH payment APIs can give your company a competitive edge by automating processes, integrating with other services, and enhancing the quality of your customer service.

The API is a specialty code specifically designed to handle simple requests through a secure block of code, so it can securely handle a request like ACH processing. This API code includes all the protocols and routines needed to take online payments securely. Almost all online payments use an API utility to facilitate the transaction process. Most fintech companies do not have the time or expertise to write the code needed for every aspect of payment processing. Using an ACH payment API is beneficial to keeping both the business and its customers safe and secure.

An API can work with different back-end utilities depending on the functionality used. An API saves time, helps you avoid the risks of creating custom code, and provides the technology to securely connect bank accounts while staying compliant with regulations and laws.

Why Would I Use an ACH Payment API?

The most common ACH payment APIs have focused on credit card processing, but their scope has quickly expanded. They are now used for peer-to-peer and business payments and even for cryptocurrency transactions or high-risk merchants that might not otherwise qualify.

Thanks to these APIs, fintech startups can focus on their company’s unique creative vision, as they don’t need to build their own payment system. The required functionality is already built-in and ready to go. 

Changing your API may seem arduous at first, but it can lead to new insights and optimizations. Make the transition easier by choosing a reliable API that will include all the features you need and have good support and documentation.

ACH Payment Integration Features

The benefits of ACH payments integration are numerous. It allows you to take advantage of the existing, regulated ACH network through a reliable integration rather than creating custom code that is often difficult and leads to further inefficiencies. 

This means that you can easily and securely add ACH payments as a payment method to your existing transaction system. You can also initiate a recurring payment throug the API, card payment authorization, and much more.

Sila offers an ACH payment API that offers secure electronic payments and streamlines the development of fintech software. Integrating an API into your product can help make it smarter with reporting, risk management, and payment processing features.

Using an API for accepting ACH payments through Sila eliminates wading through technicalities and jargon while offering users online payments. Most people find it challenging to take advantage of an API when they don’t understand what it can do. Integrating blockchain technology will make it easy for people to take advantage of a platform that offers benefits without being overwhelmed by the industry-speak.

When you’re looking at your options, consider Sila’s features that set it apart:

  • Bank account verification
  • Identity verification
  • KYB/KYC
  • Creating digital wallets
  • Facilitating secure ACH transactions
  • Smart contracts and programmable money

You can use the Sila API platform to create powerful fintech products that make it easy to send money internationally, secure financial transactions, and speed up the sending of electronic cash.

Is an ACH Payment Processing API Right For Your Business?

One of the best benefits of Sila’s API for your next fintech startup is that you’ll be able to integrate ACH transactions to offer more options and efficiency to your customers.

Financial institutions, including fintech start-ups, which operate using the ACH Network, must be approved by NACHA and regularly abide by NACHA operating rules, OFAC guidelines, KYC guidelines, and Regulation E.

ACH payments are tricky to process and can take up a lot of time. On top of this, financial institutions have to be approved as an Originating Depository Financial Institution (ODFI) or a Receiving Depository Financial Institution (RDFI)

For an ACH transaction to move through the system, the financial institution must ensure there are no return codes and that the entry request was completed correctly. Banks and other F.I.s are responsible for meeting all compliance requirements to protect the ACH Network. Doing so helps prevent illegal transactions from compromising your bank’s security. 

That’s why many smaller companies simply can’t accept ACH transactions through their bank account- without the cost affecting their bottom line. Bank fees can be significant, as many charge the business for each ACH transaction.

Using Sila’s ACH Payment API

We’ve solved the problem of a slow ACH transfer by creating an API that eliminates the high cost of transactions through your bank and offers additional benefits like automatically converting your money into the SILAUSD stablecoin. 

The Sila API is helping to make financial services more accessible to small business owners and is increasing the technological and diverse nature of these services. This is all while keeping your data secure.

Sila’s API can make it easy to store and transfer between bank accounts, cryptocurrency, and digital wallets on your application while staying compliant with U.S. law and including regulatory compliance features.

Find out today how Sila API can help you bring your idea for a financial app to life and make it successful!