Are EFT and ACH the same?

Many people seem to have a misconception about electronic giving. We hear many church administrators say they already offer electronic giving or their members are already giving electronically. In most cases what they mean is that some of the members use their bank’s “Bill Pay” feature to process contributions to their church electronically.  There is a difference between the electronic process used by banks and that utilized in Online Giving.

When a member arranges to process the church donation using his/her bank’s Bill Pay service, he/she is simply instructing the bank to issue a check on a certain date for the specified amount. The bank mails a paper check to the church which the church staff has to process like any other check received during the Sunday Mass. This process is commonly referred to as EFT – Electronic Funds Transfer.

In Online Giving, there is no check issued by any bank and the member’s donation goes directly from the member’s bank account to the church’s bank account. It is transmitted over the ACH network. The term ACH stands for Automated Clearing House. ACH is an electronic network of financial institutions in the United States. It is managed by NACHA – Electronic Payment Association, a nonprofit organization with over 11,000 members that manages the development, administration, and governance of the ACH Network.  

So why would anyone switch from EFT to ACH for church donations? In the first place, there is no risk of losing a check in the mail in ACH process. Secondly, the bank deducts the funds from the account on the scheduled date although it may take 5 to 7 days for the check to reach the church. If the check is lost, there is no way for the church or the member to know. The church member may be under the false impression that he/she has given to the church whereas the church may think the member simply forgot to give since the donation is voluntary. In the case of ACH transaction, the church will know what it should be collecting if the member has set up recurring donations. Also, it also does not have to process a paper check which in some cases adds to the cost. The ACH transfer takes no more than 2 to 3 days and can be traced easily.

Thirdly, Online Giving has several features, such as scheduling pledges and recurring contributions, choosing the date to give and frequency (weekly, bi-weekly, monthly, quarterly, etc.) suspending or cancelling future donations, etc. The EFT payment option offered by banks generally does not have as much flexibility as the ACH option offered by Online Giving.

As the volume of checks steadily declines, it is going to increase the cost of issuing and processing them. The ACH option is the most flexible, secure and cost-effective way to donate and is a true win-win situation for both the church and the member.   

Article written by: Vijay Jeste, Product Manager, Our Sunday Visitor