ACH vs. Credit Card: Which Is Best for B2B Payments?

Believe it or not, there are some businesses out there that are holding onto the idea of checks for payments. However, most companies are pushing toward fully digitizing their accounting processes. With those efforts has come an increase in ACH and credit card payments in business-to-business(B2B) transactions.

According to Pymnts, checks and cash are on the way out, and electronic payments are on the rise. In fact, 68 percent of CFOs have seen an increase in ACH payments, and 64 percent have seen an increase in credit card payments. Other electronic payment methods on the rise include wire transfers, PayPal, and virtual cards.

If you’re a business owner, you may be scratching your head and wondering if ACH or credit card payments are the best options for your company. The first step is understanding the key differences between the two. Keep reading to learn more about ACH and credit card payments and which one is best for B2B transactions.

What Are ACH Payments?

ACH payments, short for Automated Clearing House payments, are a type of electronic funds transfer that enables businesses to transfer money from one bank account to another. They are widely used in the United States and are considered a safe, secure, and cost-effective way to transfer funds.

These payments go through the ACH network, which is regulated by the National Automated Clearing House Association, or Nacha. There are two types of transactions — ACH credit and ACH debit. The first involves the sender authorizing the transfer of funds from their bank account to the recipient’s bank account. The funds are then moved to the recipient, usually within 1-2 business days. When a buyer sets up a recurring payment to a vendor, it’s an ACH debit. These transactions are initiated by the receiver.

ACH payments can be used for various purposes, including direct deposit of payroll, payment of bills, and online purchases. They are typically more convenient and less expensive than traditional payment methods such as paper checks, wire transfers, or credit card transactions.

What Are Credit Card Payments?

Just as individuals have credit cards, businesses can as well. These types of payments refer to the transactions made by customers to purchase goods or services using credit. Credit card payments are governed by the Federal Trade Commission. This payment method has become increasingly popular due to its convenience and speed.

To accept credit card payments, businesses need to have a merchant account with a payment processor. The payment processor acts as a middleman between the business and the customer’s credit card issuer to facilitate the transaction.

When a customer makes a purchase using a credit card, the payment information is transmitted securely to the payment processor, who verifies the payment and then transfers the funds to the business’s bank account minus a processing fee. This fee is usually a combination of a flat fee and a percentage of the transaction amount.

ACH vs. Credit Card Differences

While both ACH and credit cards are easy-to-use forms of electronic payments, they differ in processing speed, protection, fees, rewards, guarantees, and more. Overall, the choice between ACH and credit card payments will depend on the business’s specific needs.

Let’s take a look at all the differences between the two below.

Processing Speed

When it comes to B2B payments, ACH payments are generally slower than credit card payments. ACH payments can take up to three business days or more to clear, with the exact timing depending on factors such as the time of day the payment is initiated and whether any holidays or weekends fall during the processing period. In contrast, credit card payments may be processed within minutes. That being said, they usually take anywhere from one to three business days.

Winner: Credit Cards


Both credit cards and ACH payments are subject to fraudulent activity, but ACH payments are typically at lower risk. Because ACH payments have such a long, standardized authorization process and banks have fraud detection in place, these online payments are less likely to go through unauthorized. Credit card fraud, on the other hand, is extremely prevalent. It is easier for predators to obtain the necessary credit card information to make unauthorized purchases.

Winner: ACH Payments

Payment Guarantee

Another important aspect for business owners to consider is the payment guarantee. For example, if an ACH payment is initiated, but the account doesn’t have sufficient funds, then the payment won’t go through. In contrast, when a credit card payment is approved, the receiver is guaranteed those funds.

Winner: Credit Cards


Another one of the biggest differences between these two types of electronic payments are the associated fees. ACH payments offer some of the lowest processing fees of any kind of payment, although they may vary depending on the financial institution. They are often a flat fee but may even be waived for certain transactions. Credit cards, on the other hand, often involve a flat fee and a percentage of the transaction amount. Credit card fees go to the issuer, the payment processor, and even the card network, which can really add up.

Winner: ACH Payments

Automation Practices

ACH and credit card payments can be automated with software designed to streamline the entire payment process between businesses. ACH payments can be initiated automatically based on predetermined dates, payment amounts, and payment recipients. In addition, ACH debits also allow payments to be initiated by the recipient. Credit card payments can also be automated and can even be used to get rewards and rebates for your business through the use of virtual cards. The key to automation is choosing the right vendor payment solutions.

Winner: Credit Cards

Dispute Policies

Once an ACH payment is processed, it cannot be reversed or disputed, except in very limited circumstances, such as unauthorized transactions or fraudulent activity. However, there are chargebacks, which happen when the transaction fails due to insufficient funds or other errors. Meanwhile, disputes on credit card payments can be initiated by the account holder, which will begin an investigation to determine whether the charge was fraudulent or not.

Winner: ACH Payments


There are limitations on ACH and credit cards for B2B payments. For starters, ACH payments require complete banking information for both parties involved. Because they take a little more work to set up, they’re not ideal for one-off payments. In addition, ACH payments aren’t the best option for international purchases. Credit cards are accepted everywhere, making them a convenient option, even internationally. However, because of the relatively high fees, they are not ideal for large payments.

Winner: It’s a tie!

ACH or Credit Card: Which Is Best?

When we examine the differences above, ACH payments and credit cards are nearly tied when it comes to overall benefits. However, the best bet is for businesses to accept payments in both forms.

Ultimately, the choice between ACH and credit card payments for B2B transactions depends on the companies’ preferences, as well as their respective payment processing systems and policies. It is beneficial for businesses to offer both options to their customers in order to accommodate a wider range of payment preferences.

Streamline Payments With Automation

Now that you recognize the importance of accepting both ACH and credit card payments, as well as the implications of both, it’s time to consider streamlining payments with Accounts Payable automation systems. Implementing automation software can help businesses overcome the challenges they face when processing B2B payments. Such challenges include reporting errors, late fees, preference of payment methods, complicated international payments, and struggles to become fully digital.

Payment automation doesn’t just save your company valuable time and resources. There are endless benefits that businesses see when they implement automation software and systems. Some advantages of payment automation include:

  • Lowering payment processing costs
  • Streamlining processes
  • Securing payment discounts
  • Harnessing cashback incentives
  • Lowering the risk of errors and fraud
  • Improving relationships with vendors
  • Learning from data analytics
  • Cutting out paper records

Whether your business prefers ACH or credit card payments, companies like P3 Cost Analysts can help you minimize vendor payment costs. In addition, P3’s AP automation tools can integrate with your current system, reducing the time and effort required to implement new processes.

You and your team can handle all your B2B payments on the easy-to-use interface. P3 offers various benefits, such as maximizing monthly rebates, immediately reconciling payables upon batch approval, paying vendors in their preferred method, and much more. Additionally, there are no subscription fees, making it a risk-free investment.


Is ACH safer than credit cards?

ACH payments are generally considered to be more secure and reliable than credit card payments because they are not subject to chargebacks or disputes.

Is ACH faster than a credit card?

Credit card payments are typically faster than ACH payments, which can take several business days to settle.

What are the disadvantages of ACH payments?

ACH payments have limits on the amount that can be transferred per transaction, and they can create cash flow issues for businesses that rely on timely payments.

Do banks charge for ACH?

Banks may charge fees for ACH transactions, although these fees are typically lower than credit card processing fees.

Can you send ACH with a credit card?

No, ACH payments can only be initiated from a bank account, not a credit card.

What is an ACH card?

There is no such thing as an ACH card; ACH payments are electronic transactions that are processed through the Automated Clearing House network.

Process Credit Card or ACH Payments With Ease

While both ACH and credit card payments have advantages and disadvantages, businesses must understand the key differences. For example, ACH payments are ideal for those seeking a cost-effective, secure, and convenient payment method. On the other hand, credit card payments offer payment guarantees, speed, and rewards for businesses that prioritize these factors. At the end of the day, most agree that businesses should offer payment solutions for both ACH and credit cards.

What can really take your Accounts Payable department to the next level is automation. P3 can help businesses streamline their payment processes for both ACH and credit card payments, making it a valuable investment for those looking to digitize their accounting processes.

Learn more about our vendor payment solutions by scheduling a free consultation with one of our experts.

Send this to a friend