An online merchant account is a business with an internet presence that accepts payments electronically.
If any business has an online merchant account they will need to have a system in place that will process various credit or debit card payments as well as online bank transfers.
This is a common account that accepts the payment from the customer and passes it on to the merchant’s bank account. This system is referred to as an “Automated Clearing House”.
An ACH is an institution that facilitates or assists in the transfer of funds from one financial institution to another. For instance, if you submit a check from another bank to your bank for payment, the check will go to the Clearing house in the area.
This intermediary body will authorize the payment that will be transfered to your bank account. It cuts out the hassle of you having to go to the bank whose check you have to get your cash.
Similarly, an ACH assists online merchant accounts to receive payments from any payment processing service such as VISA or MasterCard, even various online banks.
An ACH acts as the link between his bank and the online merchant bank account, to facilitate the transfer of funds. Whenever a customer authorizes payment through an online process, such as a credit card or any electronic means, the ACH ensures that the payment is validated and that the merchant will receive his payment in due course.
Many online merchants have chosen to use free online payment processors to cut on costs of setting up their own payment gateways. Though the process is free, the payment transactions still have to go through the ACH in order for the merchant to receive his payment.
This is a very secure way of transacting online and is catching on very fast. In fact, accepting payments online is as easy as accepting cash over the counter, only this way the merchant does not have to go to the bank to deposit the money, the ACH does it for him.