ACH vs Lockbox

There are three methods in which a lender can collect his percentage of Visa/MasterCard sales

1. Split funding
2. Automated Clearing House (ACH)
3. Lockbox (sweep acount)

The split funding method has already been reviewed in the following discussion here.

The other two methods of funding are dependent on whether or not the lender provides that method, and whether or not the merchant qualifies for the method.

In an ACH method, the lender simply debits the appropriate percentage from the merchant’s bank account the next day after the batch.  The lender will need online access either to the merchant processing statements or to the bank account so that they know the appropriate amount to debit every day.  Some merchants may not qualify for this method if they are already incurring numerous NSF and overdraft fees.

If the merchant is not comfortable with the lender having online (view only) access to the bank account, a lockbox account can also be created.  The sweep account is a separate bank account where the merchant processing is deposited into.  The lender will log into the bank account and withdraw his appropriate percentage of Visa/MasterCard sales daily.  The remaining due percentage is then delivered to the merchant.  A downfall of this method is that it takes an additional 24 hours for the merchant to receive the days batch.

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