FAQs: ACH Credit

What is ACH credit?

ACH credit is a transfer of funds initiated by a sender to credit a recipient’s bank account via the Automated Clearing House (ACH) network. It is commonly used for direct deposits, tax payments, and electronic payments. ACH credits are secure, cost-effective, and typically take a few business days for processing.

What do I need to use ACH credit?

As a Tab merchant, you just need to provide your bank’s routing number and account number in Billing Settings to accept ACH credit. Your customers’ payment flows directly from your customers’ banks to your bank and does not flow through Tabs as an intermediary.

What happens when a customer pays with ACH credit?

When a customer pays with ACH credit, they are logging into their own bank or AP management system and initiating a payment to your bank account.

Separately, they can inform you of this payment by clicking Notify on the Tabs customer portal which is linked to from their invoice. You will receive an email notification and the payment status will automatically be marked as "Pending”..

While the payment is marked as "Pending," Tabs mutes any dunning notifications to avoid unnecessary reminders. 

Once the payment is received, you can update the status of the invoice to "Paid." If the payment doesn't arrive in a reasonable amount of time, you can follow up with the customer or move the invoice back to Due or Overdue to re-trigger notifications.

Can I pass on fees for ACH credit?

Since the customer is initiating payment through their own bank, there are not usually fees associated with accepting the payment. If the customer is initiating a bank transfer from an account that is outside of the US or not denominated in USD, there may be a foreign exchange fee or international ACH fee assessed by the sending or receiving bank. 

Can I auto-charge my customers who pay with ACH credit?

You cannot auto-charge for customers who pay with with ACH credit. ACH credit must be initiated by the customer to send the money, therefore Tabs can not automatically pull the funds on your behalf.