ACH and Pioneer: Two popular electronic payment systems that are quite different from each other
Digital services are taking over financial services and with that, companies are emerging that offer cheap and efficient processes. Technology is inserted in several activities and sectors of the economy, in the financial market it is also essential, providing more efficient services without bureaucracy, mainly in transactions between countries.
In recent years, innovations in electronic payment instruments using cards have developed into more practical forms. Currently a payment instrument known as electronic money has been applied in many countries. Although it contains slightly different characteristics from other payment instruments such as credit cards and ATM/Debit cards, the use of these instruments remains the same as credit cards and ATM/Debit cards, which are intended for payments.
In simple terms, electronic money is defined as a means of payment in electronic form where the value of the money is stored in certain electronic media. Users must first deposit their money to the issuer and store it in electronic media before using it for transaction purposes. When used, the value of electronic money stored in electronic media will be reduced by the value of the transaction and after that it can be refilled (top-up). Electronic media to store the value of electronic money can be in the form of chips or servers.
This technological revolution brought companies that offer financial operations for sending and receiving international money through digital platforms, such as ACH and Payoneer, for example. Do you know how they work? If you have any questions, this post will help!
What is Automated Clearing House?
The Automated Clearing House (ACH) is an electronic-based network created in the US to help facilitate financial transactions. These networks use batch processing in addition to store and forward systems to create electronic connectivity following the adoption of cellular infrastructure.
It is an electronic funds transfer system run by NACHA. NACHA stands for National Automated Clearing House Association, and this association has been around since 1974. So it’s been 47 years since this payment association has provided ACH transactions for use in payroll processing, direct deposits, tax returns, consumer billing, tax payments, and many other things. provided by the payment service system in the United States.
Institutionally, NACHA is the institution that regulates and provides the ACH network in the fields of management, development, administration, and regulation. The organization’s operating rules are designed to facilitate the growth of the clearing business in the size and scope of e-payments in an increasingly large network.
Based on how it works, the ACH network is an electronic system that serves financial institutions to facilitate financial transactions in the United States of America. This electronic network basically acts as a financial center and helps customers and institutions move money from one bank account to another. ACH transactions themselves consist of direct deposits and direct payments, including business to business transactions, government transactions, and retail transactions. The benefits of this electronic network are very useful for increasing the efficiency and timeliness of transactions related to the government and business sectors.
According to official records, the ACH network conducts $43 trillion in electronic transactions with as many as 25 billion financial transactions annually. The goal of creating the ACH network is to diversify and expand electronic payments by applying technology and innovation. The network has so far been successful in terms of business. It has even encouraged their customers to pay for goods and services through the ACH network instead of using a debit or credit card because of its convenience.
The ACH has been widely embraced because of the human need for inter-connectivity, use of electronics, and dependence on mobile devices. The direct transfer, payment or deposit of money or certain information from one end to the other has led to the establishment of Automated Clearing Agencies. All transactions go through the ACH Network and transmit electronically from sender to receiver. However, the network only allows for two transactions: direct payments and direct deposits.
Direct deposit requires depositing money for the following purposes: payroll, employee reimbursement, other refund taxes, government benefits, annuities, interest payments. On the other hand, direct payments include the use of funds to make certain payments. One example is when individuals or institutions pay via ACH as either a credit or debit transaction. Each of them specializes in service delivery.
Use of Automated Clearing House
The user is a person or organization that makes direct payments or direct deposits through the ACH network either as credit or debit transactions. Included in credit transactions are direct deposits, vendor payments, and payroll systems. And which includes debit transactions, namely: Payment of insurance premiums, mortgage loans, new applications such as point of purchase and other bills.
The ACH transaction system can be adapted to the following purposes:
– Make E-commerce payments
– Make payments between business to business
– The treasury management department of the Bank sells these network services to businesses and governments
– Make tax payments at federal, state and local levels
– Make charitable donations
– Direct debit payments of consumer bills such as loans, utilities, rent, insurance premiums and mortgages and also among other payments
– Conducting indirect fund transfer transactions between accounts at various financial institutions
– Direct deposit transactions such as payroll, Social Security Funds, tax returns and other payments.
The use of the ACH network creates a fast, easy, and secure method of conducting financial transactions electronically. When entries are made for ACH operators, they undergo sorting before being sent to the Recipient Depositor Financial Institution (RDFI).
And we’re going to the second part…
What is Payoneer?
Payoneer is a company in the financial sector that works with an international system for sending, receiving money and payments, that is, electronic financial transactions between countries, through a digital platform. Founded in 2015 and headquartered in New York, United States, it is present in more than 200 countries, operating in different currencies and has partners with the objective of facilitating and providing advantages to customers, with low tariffs and agility in processes.
What is the purpose of the company?
Payoneer’s purpose is to offer a digital tool that allows you to make payments, send and receive money from anywhere in the world, which is very interesting for those who do business abroad or travel frequently.
What solutions are offered?
Payoneer, like other companies that carry out fully digital international financial transactions, creates solutions to optimize time and facilitate processes, which in the past were bureaucratic and expensive. The company offers solutions for withdrawing funds from its own account to a bank account in local currency and also with a physical prepaid card, receiving and making international payments, in addition to managing funds, withdrawing money at ATMs or making purchases.
How to open a Payoneer account?
Opening a Payoneer account is simple and the site can be translated into more than 35 languages, in addition to offering 24-hour technical support. Even though many people feel uncomfortable dealing with financial matters over the internet, the processes are 100% safe and provide incredible advantages.
It is possible to open an account from the computer or a smartphone and as soon as you open the platform a message will appear saying “sign up and receive 25 dollars”, however, this amount is a bonus offered for when you receive 1000 dollars in payments on the platform. To open the account just follow the steps below:
access the website or download the Payoneer app;
click on “subscribe”;
fill in all registration data fields;
provide the security data;
fill in bank details to receive funds;
carefully read the terms of conditions;
click submit.
After creating the account you can request the prepaid card and when it’s at hand, just unlock and start using. It is worth noting that it is essential to research a lot about the fees and charges of each process to choose the most economical way that meets your needs and objectives.
The difference between the two?
Basically the ACH is “more official” because it is regulated by NACHA, an official financial institution in the United States. Supervision is certainly much stricter because it involves the credibility of a country’s financial system, especially a superpower like the United States. However, this payment network may not be flexible enough compared to Payoneer as each user must have at least an account with a bank that is legally operating in the United States. On the other hand, Payoneer, like PayPal, does not require it. That is why Payoneer is more flexible and accommodating. This online payment system does not require a United States bank account, therefore it can be used freely by people outside the United States, who of course are not tied to United States financial institutions.
If you are used to multi-transaction to multiple recipients on behalf of your company, Payoneer is more recommended, whereas if you are used to paying as an individual and you have an account with a bank in the United States, using ACH bank debit can be chosen. However, you can still pay as an individual from your Payoneer account balance.
