Jan/Feb 2007

Ask the Expert: What is ACH (EFT) and how can it help my nonprofit organization?

by David Crooke, Founder and Chief Technology Officer, Convio

What is ACH?

ACH stands for "Automated Clearing House" and is the U.S. Federal Reserve system for electronic processing of checks and automated inter-bank transactions. ACH is the system that underpins services such as online bill payment, and Check 21.

In an online fundraising context, ACH debit transactions can be used to automatically draft one-time or sustaining (recurring) gifts from a donor's checking account. This is often generically referred to as EFT (Electronic Fund Transfer).

How does a donor give online using ACH?

The donor experience is very similar to giving by credit card. When donors visit a nonprofit Web site, they simply supply their checking account details (routing number and checking account number) instead of their credit card details. For organizations using Convio software, Convio will submit the transaction to the Federal Reserve via our ACH processing partner, who will draft the donor's checking account.

Is using ACH secure?

Provided that your Web site takes appropriate security precautions, a donor is actually safer using ACH than a credit card. ACH only operates within the U.S., and domestic checking account numbers are of almost no value to fraudsters outside the U.S. In Convio's case, we apply the same security measures to ACH transactions that we do to credit cards, including not storing donors' checking account numbers in the Convio database.

What are the key benefits of ACH over credit cards?

ACH offers two key benefits for online fundraising. One is the cost. ACH transactions incur a flat fee, rather than the percentage charge levied by credit card issuers. The larger advantage, however, is consistency for sustaining gifts. Unlike credit cards, checking accounts do not have an expiration date, and people rarely switch banks. This results in a much higher donor retention rate for sustaining gifts.

When did Convio make ACH available?

ACH processing is supported by the new Convio donation campaigns application, which shipped with Convio 5.0 in the summer of 2006. Although ACH technology has been available for a long time, using it online did not have widespread public acceptance. Since the adoption of services such as online bill pay, providing a checking account number online is now a familiar concept to the American public, and makes online donations with ACH a realistic possibility.

How can my organization start taking donations via ACH?

Consult your online fundraising provider to see what ACH solutions are available. For our clients, Convio has partnered with an ACH processing vendor called Landmark Clearing, who will provide Convio clients with a streamlined setup process and discounted rates.