ACH Transfers May Soon Be Available at Coffee Shops

Imagine paying for a $4 latte with an ACH transfer. A new partnership between Ansa and Plaid wants to make that a reality.

ACH has traditionally been unavailable for what Ansa defines as “habitual-usage, low-transaction value” payments, such as those in coffee shops or fast-food restaurants. The partnership integrates Plaid’s pay-by-bank offering with Ansa’s stored value wallets, offering the potential for cost savings on wallet transactions. Ansa’s Incentive Engine provides tools to enable brands to nudge and reward their top customers for using these preferred payment methods.

Many businesses have been reluctant to accept ACH payment payments due to concerns about their ability to process them, the speed of transactions, and the risk of fraud. Plaid has countered these concerns by highlighting the advantages of ACH for merchants, such as ease of use, reduced payment churn, and even faster processing times if they choose to use same-day service.

ACH payments can also be fairly inexpensive for merchants, with the median processing fee being around 29 cents per transaction.

Benefits for Merchants

While buying coffee with an ACH payment may seem far-fetched, there are real benefits for merchants that could make this option very attractive.

“From a merchant’s perspective, the low transaction cost is very enticing,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “And the chances of a $5 coffee purchase being rejected are slim. The big question, as always, is whether consumers will flock to the app.”

Ansa suggests that merchants can offer bonuses through their wallet loads, which implies that consumer may need a separate wallet within the app for each merchant they frequent. Starbucks, on the other hand, has a closed-loop prepaid card that provides consumers with a bonus for loading funds. This card is usable exclusively at Starbucks locations and costs the merchant nothing to accept or process.

“The biggest challenges for merchants using ACH is getting the customer to provide banking details and the lack of an authorization function,” Apgar said. “There is no way in the ACH construct to check the balance in a demand account before attempting to debit it for a purchase.”

“With debit cards, merchants get real-time confirmation that there is money in the account and consumers get to use their own cash vs. a credit line on a credit card,” he said. “It’s also not clear who is holding my money in the app, and what happens to it if either Ansa or the merchant close up shop.”