A/R University

Decoding the Costs of Payment Channels

With busy schedules and lengthy to-do lists, both vendors and customers need the invoicing and payments process to be as frictionless as possible. To this end, payment solutions should be intuitive, convenient, secure, and cost-effective.

As technology advances, businesses are able to choose from a variety of methods to conduct transactions. While selecting the best solution for your business, there are several factors to consider, including the speed of payments and the cost to receive them. In addition, vendors need to consider their volume of monthly transactions, the need for working capital, profit margin, and pricing power in order to best determine their method for invoicing and payments. Moreover, automated and mobile solutions provide the most convenience while improving the overall buying experience for customers.

Vendors with high monthly volumes of transactions should strongly consider electronic and automated solutions, which offer the greatest opportunity to accelerate payments and boost working capital. Profit margin and pricing power are factors that can determine if full-time credit card acceptance is possible. For highly profitable vendors, paying credit card fees may be a small price to encourage sales and accelerate cash flow.

Similarly, if a vendor has pricing power, they may be able to pass on the credit card fee to their customers. In many cases, however, the opposite is true and vendors may choose to only accept credit cards from top customers and/or to collect aging receivables.

Calculating the costs of payment methods can be difficult, especially when accommodating vendor and customer preferences. We have listed the three main payment options— ACH transactions, credit cards, and paper checks— and examined the various costs of each in order to help you determine the best A/R practices for your company.

ACH Transactions

ACH (Automated Clearing House) fosters fast payments, typically taking a single day to complete transactions and is cheaper to accept than both paper checks and credit cards. According to data from NACHA, the average processing fee for an ACH payment is $0.11.
Some providers will charge a flat fee, ranging from $0.20 to $1.50 per transaction, a credit or debit fee, ranging from $0.15 to $0.95, or a monthly fee (also referred to as an account fee), ranging from $5- $30.

Credit Cards

More and more consumers are turning to credit cards, seeking a convenient way to pay invoices. Cards are secure, allow auto payment options, and make payments easy to manage.

Credit card processing fees can range from anywhere from 1.5% to 3.5% per transaction, depending on card swipe or keyed-in transactions.

These costs may include interchange fees and card acceptance costs and vary depending on card network, card type, processing type, and merchant category code.


Checks remain a part of the payment landscape even as technology evolves. However, more and more companies are beginning to stray from paper-based, manual processes, recognizing that they can’t keep up with digital payments.

Checks can be lost or stolen, and cause accounting processes to become laborious. According to NACHA, accepting paper checks costs an additional $1.50 in processing fees, which does not include labor fees that can raise this to almost $8 more per check.

Checks additionally bring risk and can incur expenses caused by bounced checks. Bank of America estimates that the total cost of accepting check payments can range anywhere from $4 to $20, considering both the price of the check and shipping, which is almost 10x more than electronic payment.

Billfire’s Valet Payments is the ideal accounts receivable automation solution.