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Last Update May 15th, 2022
What is a Recurring ACH Payment
A recurring Automated Clearing House (ACH) payment is a transaction where an individual, business owner, or company is paid directly from a buyer or user’s bank account for a purchase or ongoing service.
This is facilitated by the customer signing an ACH Authorization form to acknowledge and give consent to a future direct payment from their bank account.
This works as a form of legal contract between the 2 parties, as it shows permission has been given for the transaction via the account holder’s signature and provision of banking details.
FAQs About ACH Authorizations
There are lots of details to consider when you use an ACH authorization form. To get more familiar with the key features of these legal documents browse our FAQs below for more information.
Do I Need an ACH Authorization Form?
It is necessary to use an ACH authorization form if you want to collect payment directly from a customer’s bank account. This allows the client to give clear consent for the payment, so their bank doesn’t block the transaction.
How Long is an ACH Authorization Good For?
Generally, an ACH authorization form is valid for up to 2 years. During this amount of time, the ACH document should be kept by both parties even if the payment is canceled as a record of the consent given at the time of the transaction.
How Can I Get an ACH Authorization Form?
How Can I Receive an ACH Payment?
To receive an ACH payment you first need the payee to complete an ACH authorization. This document informs your bank that you have permission to deduct money from the individual’s account directly.
Once the form has been completed, you can then carry out the transaction using your payment processing software as normal. The payment should only be taken on the agreed-upon date (or dates if the payment is a recurring one).