The Quick Guide to EFT vs. ACH and Why it Matters for Your Rental Business

Oct 20th, 2023

ACHPayment ProcessingAscentZeroCostGeneral

Rental businesses must find a solution that allows them to take online payments quickly and easily without cutting into their bottom line. There is a lot of jargon in the industry that can make the process of finding the perfect payment solution feel complex, especially if you are new to the vacation rental business. Two of the most well-known ways to accept payments include EFT and ACH, but which one is right for you and your guests? 

If you have been debating between EFT vs. ACH, here is what you need to know to make the most informed decision. 

 

What is EFT?

An Electronic Funds Transfer (EFT) encompasses the process of sending money from one person (the payer) to another (the payee). These EFTs take place entirely online and involve no paper money or checks at any stage of the process. Other terms for this type of payment include e-checks and electronic payments. 

EFT is a rather broad term that covers a variety of payment methods. Some of the various types of EFTs include:

• ACH transfers

• Wire transfers

• Any type of ATM transaction

• Debit and credit card payments

• Peer-to-peer payments (PayPal, Venmo, etc.)

 

What is ACH?

The Automated Clearing House network (ACH) allows payers to move money from one bank account to another electronically, which means it falls under the scope of an EFT as well.

In this process, all transactions are batched and processed at set points throughout the day. This proves a little more complicated than other processes, such as credit card payments. 

At its core, ACH is essentially the same thing as an e-check. They both move funds directly from one bank account to another. Both e-checks and ACH use the Automated Clearing House to move the money around. 

 

ACH vs. Other EFT Methods: Comparisons for Vacation Rentals

The best way to transfer money or accept funds ultimately depends on your business. Here are some key considerations to help you decide which payment method is best for your rental.

 

Cost-Effectiveness

When the bottom line is the primary concern, ACH tends to win out over other EFT methods such as wire transfers.

Fees will vary a lot depending on the type of EFT, the bank, and whether it’s a domestic or international transaction. But generally speaking, ACH fees typically hover around 1% while other EFTs might be closer to 3%. 

If your goal is to reduce processing fees, then ACH tends to cost less compared to other EFTs like wire transfers or credit card payments.

 

Processing Time

ACH tends to take longer than other EFT methods such as wire transfers, digital wallets, or debit card payments. A full week can pass before an ACH transaction is approved and moved to the payee’s account. 

When it is important to make sure funds are available, payment processing time matters. Credit and debit card payments are usually available within the first 72 hours of making the booking. 

 

Global vs. National Customer Base

Take a minute to think about your typical guest who books with you. Many vacation rentals are booked by people who are already in the country where your rental resides. However, some rental owners find that their property is often frequented by international guests. This poses a concern when it comes to payment methods.

It is possible to accept ACH payments internationally but be warned the process is much slower than it is for a national customer base. If you have a lot of international guests, you should consider offering other options such as credit or debit cards that process more quickly. 

 

Guest Experience

There is no definitive answer here, as the payment methods favored by your guests will ultimately depend on personal preference. Guests will generally appreciate the freedom to select their own payment method. 

Some may prefer the ACH route if it helps them avoid a surcharge often levied by vacation rental companies for credit card payments. Others may prefer to pay with a rewards card even if it incurs a surcharge, since they will earn points or miles for their spending.

Of course, it is also worth noting that some people might even prefer a newer way to pay: crypto. The cost to accept cryptocurrency tends to be pretty straightforward and, like a surcharge for the use of a credit card, the fees can be passed onto the person making the booking.

 

Provide More Choices For Your Guests

Ascent Payment Solutions allows you to offer guests their choice of payment methods, including ACH/e-checks, credit and debit cards, and even cryptocurrency. With AscentZeroCost, a compliant surcharge solution applied to credit card payments, you can leave guests in control without impacting your bottom line. That means more money in your pocket. 

We also provide critical security features to keep funds and data protected from checkout to the delivery of the funds. With core features like identity verification and PCI compliance, you can make secure bookings and reduce the likelihood of a data breach. 

With decades of experience in the hospitality industry, we understand your business. Our expert team can provide individualized care and support so you can focus on growing your rental business. Contact Ascent for more details today!