Last Updated on January 13, 2026 by Ewen Finser
There’s room to cut costs in any organization, but when looking for ways to lower expenses, many business owners tend to focus on larger cash outflows and overlook smaller costs. Payments is one of those often-overlooked areas that may seem insignificant at first glance but can add up greatly over time.
One thing that can impact how much you spend is whether you pay and get paid via ACH or credit card. This choice may not seem like a big deal, but there are many advantages and disadvantages to each method — including differing transaction fees.
So let’s take a close look at ACH and credit card payments so you can determine which is the best option for your business.
ACH vs. Credit Card Payments: At a Glance
ACH | Credit Card | |
Best For | High transaction amounts | Low transaction amounts |
Transaction Fees | Minimal to none | Often around 2%-4% |
Payment Processing Times | Around 3 to 5 business days | Around 1 to 3 business days |
Guaranteed Funds | No | Yes |
Transaction Limits | Higher; $1 million for same-day ACH | Lower; depends on individual credit card limits |
The Ins and Outs of ACH Payments
An ACH transfer is the electronic transfer of funds between bank and credit union accounts through an automated clearing house (ACH), a network used for processing financial transactions. ACH payments are extremely popular: during the third quarter of 2025, there were a total of 8.8 billion ACH payments, which is 5.2% higher than the previous year.
Where ACH Payments Shine
Low Fees
ACH transaction fees are usually lower than those of credit card transactions; some payment providers even allow you to make free ACH payments. For those that charge a fee, it’s usually pretty low — flat fees are often less than $1, while percentage fees are generally no higher than 1.5%.
Keep in mind that the fees you’ll pay will depend on your payment provider, and if you choose a fast payment option like same-day ACH, you may be hit with an additional charge.
Reduced Churn Rate
A customer’s credit card details can change frequently, while bank account information often remains the same. ACH makes it easier for customers to remain on your books, and they’ll rarely have to go through the hassle of updating their payment details.
The reduced need to update payment information also makes ACH transfers the more popular option for recurring payments like subscriptions.
Higher Transaction Limits
ACH is generally the better payment method for large transactions. For card payments, you’re limited to your credit line, which will vary depending on the business and the credit card. For ACH, the current same-day payment limit is set at $1 million — a number that dwarfs credit limits.
Where ACH Payments Fall Short
Slow Processing Times
ACH payments are usually a lot slower to process than credit card payments. A standard ACH transfer could take up to 3 to 5 business days to settle, while credit card payments usually settle within 1 to 3 business days. Many payment processors do let you choose same-day or instant ACH for faster settlement, but expect to pay an additional fee — it’s not unusual to incur a $10 expense for fast ACH.
Funds Aren’t Guaranteed
With credit card payments, funds are guaranteed. This isn’t the case for ACH transfers. Payments can be rejected for several reasons, including insufficient funds, closed accounts, or incorrect account information.
U.S.-Only
In most cases, ACH payments are U.S.-only. There are international ACH options available, but these may be limited, take longer to transfer funds, and cost more.
The Ins and Outs of Credit Card Payments
Where Credit Card Payments Shine
Faster Processing Times & Guaranteed Funds
With card payments, you get your funds faster and your vendors get paid quicker. Processing times are also shorter with credit cards than with ACH transfer; while it may take up to five business days for funds to settle with ACH, it frequently takes just a day with a credit card.
Additionally, with a credit card, funds are guaranteed — you don’t have to worry about payment failures from insufficient funds or incorrect bank account information.
Rewards and Points
Many customers like to pay via credit card because of the rewards and points that credit card companies offer. Your business can benefit from these too: If you make business payments with a credit card, you might reap rewards like cashback and airline miles.
International Payments
Credit cards work better globally than ACH payments do. This lets you easily receive payment from customers around the world, as well as pay vendors located outside of the U.S.
Where Credit Card Payments Fall Short
Higher Fees
ACH payments can sometimes be completely free to make — and if not, the transaction fees are usually minimal. Credit card payment fees, on the other hand, include interchange fees (which are set by the card company) and processing fees set by the payment provider.
In total, you could be looking at fees between 2% and 4% per transaction, which really adds up over time.
Lower Transaction Limits
While your business can make same-day ACH payments of up to $1 million, transaction limits are far lower with a credit card. Here, you’re limited to your credit line, which might be in the tens of thousands, making credit cards more well-suited for smaller payments.
Higher Churn Rate
Your customers’ credit card information changes frequently, whether they lose it, it expires, or they just get a new one.
This makes credit cards less reliable for recurring payments like subscriptions, and you may lose more customers due to the need to update payment details. With ACH, payment information generally stays the same for several years, reducing churn.
Choosing a Payment Processor
When comparing ACH transfers to credit card payments, there are some blanket statements that can be made, but a lot of the specifics can’t be generalized: Transaction fees, international payment capabilities, payment processing times, and fast payment options will all depend on your payment processor.
So, it’s not just a matter of choosing between ACH and credit card payment — you also need to decide which payment processor best fits your business’s unique needs.
Here are some examples of popular payment processors:
Melio
- Fees:
- Standard ACH: Free, limitless ACH with their Unlimited plan
- Same-day ACH: 1% ($75 maximum)
- Credit card: 2.9%
- Processing Times:
- Standard ACH: 3 business days
- Same-day ACH: Same business day
- Instant ACH: Minutes
- Credit card: Same business day when sent to a bank account
- Plans & Pricing:
- Go: Free plan, limited to one user
- Core: $25/month, $10/month per additional user
- Boost: $55/month, $10/month per additional user
- Unlimited: $80/mo, unlimited users
- Platinum: Custom pricing
BILL (Formerly Bill.com)
- Fees:
- Standard ACH: $0.59
- Faster ACH (same-day and next-day): $11.99
- Credit Card: 2.9%
- Processing Times:
- Standard ACH: 2–4 business days
- Same-day ACH: Same business day
- Credit card: 1–2 business days
- Plans & Pricing:
- Essentials: $49 per user, per month
- Team: $65 per user, per month
- Corporate: $89 per user, per month
- Enterprise: Custom pricing
FlexPoint
- Fees:
- Standard ACH:
- Essentials plan: $1 per transaction
- Growth plan: $0.50 per transaction
- Plus plan: $0.25 per transaction
- Same-day ACH:
- Essentials: 1%
- Growth: $50,000/month included
- Plus: $100,000/month included
- Credit Card: Interchange+
- Standard ACH:
- Processing Times:
- Standard ACH: 5 business days
- Same-day ACH: Same business day
- Credit Card: 3 business days
- Plans & Pricing:
- Three plans: Essentials, Growth, and Plus
- Pricing information not disclosed on their website
There is no one “best” payment processor. The ideal choice is going to depend on your business’s size, frequency of global payments, etc.
That being said, for most SMBs, Melio is a solid choice. They allow you to manage both AR and AP, and their transaction fees for ACH transfers and credit card payments are competitive.
BILL is like Melio in the sense that their credit card transaction fees are the same and you can handle receivables as well as payables. However, its per-user + per-month fees can end up being costly for smaller businesses. And if you’re looking for a platform that focuses heavily on AR automation, you might like FlexPoint.
When Should You Use ACH vs. Credit Card Payments?
It’s not always easy to know when to use an ACH transfer vs. a credit card payment.
For example, assume a $0.50/transaction ACH rate and a 3% credit card fee. If you have to pay a vendor $20,000, you’ll still just pay the $0.50 flat fee if you use standard ACH. However, if you pay with a credit card, the transaction fees will total $600. This is obviously a huge difference, so with most larger transactions, ACH will be the more economical choice.
However, for smaller transactions, the fee delta can be negligible. In these cases, it’s important to look at the other differences between ACH and credit card payments to see how they stack up. For instance, your international payment options could be greater with a credit card. Plus, with a card, you also get the opportunity to benefit from rewards and points that you don’t get when paying via ACH.
Overall, they’re both solid options for making payments and getting paid. Just be sure to look at each transaction and your business’s needs to see which one is best for you.