Bank / ACH / EFT Payments – Settlement, Disputes, and Best Practices

This article explains how bank payments (ACH in the United States and EFT in Canada) settle through the banking system, when funds are considered received, and what merchants using Benji Pays should know about dispute and return timeframes.

1. How Bank Payments Work

When your customer pays by bank account instead of credit card, the funds move through a clearing network (ACH in the U.S. or EFT in Canada). These systems do not move money instantly and allow for post-settlement reversals.

• Settlement Delay (T+ days): After the debit request is initiated, the funds typically settle after one or more business days — referred to as T+1, T+2, or T+3 (Transaction Day + X Business Days). This delay allows for inter-bank clearing and fraud screening.
• Funds Availability vs. Settlement: Even if a payment appears successful, the funds can still be reversed for reasons such as insufficient funds, unauthorized transactions, or administrative returns.
• Payout Timing: Once settlement is complete, Benji Pays transfers the funds to your linked bank account according to your payout schedule.

Funds settling and being payed out to your bank account often happens prior to your payment processor actually receiving the funds from the customer's bank.  This is why returns or chargebacks can occur even after you've received the funds.

2. When Funds Are Truly “Received”

• Transaction approved: The customer’s bank has accepted the debit request.
• Settlement confirmed: Funds have cleared and are reflected in your Benji Payments or processor balance.
• Payout received: Funds have reached your external business bank account.

Even after settlement appears complete, reversals can still occur. To minimize risk, wait 3–5 business days after settlement before shipping goods or activating services. This buffer helps ensure any returns or disputes are processed.

3. Returns, Reversals, and Disputes

U.S. ACH (Automated Clearing House)

• Governed by the NACHA Operating Rules.
• Consumers can dispute unauthorized ACH debits within 60 calendar days of the statement date.
• In certain cases (e.g., late-discovered fraud), this window can extend up to 2 years.
• Business accounts have much shorter windows — usually 24 hours – 2 business days to report unauthorized debits.
• Financial institutions can also return transactions for insufficient funds, closed accounts, or administrative errors within the first few business days.

Common return reasons: Insufficient funds, account closed, invalid account number, or unauthorized transaction.

Canadian EFT (Electronic Funds Transfer)

• Governed by the Payments Canada Rules.
• EFT settlements usually occur within 1–2 business days.
• Senders can request reversals for valid reasons (duplicate payment, wrong account, unauthorized debit) within 5 business days of settlement.
• After that, reversals depend on the receiving bank’s cooperation and are not guaranteed.

Key point: While EFT disputes are less common than ACH returns, early reversals can still occur and should be considered when managing cash flow and fulfillment timing.

4. Chargebacks and Dispute Handling

Unlike card payments, ACH and EFT do not have a formal “chargeback” process. Instead, reversals are processed through the banking network itself. When a reversal occurs:

• The funds are withdrawn from your Benji Payments or processor balance and then from your bank account if there are not enough funds in your processor balance.
• You may incur a return or dispute fee.
• You must work directly with your customer to resolve the issue and confirm proper authorization.  Benji Pays, nor your payment processor have any way of helping with these ACH / EFT disputes unfortunately.

5. Best Practices for Benji Pays Merchants

1. Use ACH/EFT for recurring or trusted transactions: These payment methods are ideal for subscriptions, retainers, and established client relationships.
2. Avoid ACH for one-time purchases: Unauthorized disputes can be raised up to 2 years after payment. Use card payments for one-off or high-value sales.
3. Wait before fulfillment: Hold goods or delay activation for 3–5 business days after settlement appears.
4. Capture proper authorization: Always keep written or electronic proof that the customer agreed to the debit and understands the terms.
5. Monitor your settlements: Benji Pays provides detailed reporting and notifications for reversals, failed payments, and returns — review these regularly.
6. Be transparent with customers: Let them know that bank payments may take longer to finalize than credit cards.
7. Maintain records: Keep copies of invoices, authorizations, and delivery confirmations to protect your business in the event of a dispute.

6. Summary Table

7. Summary Recommendations

• Wait 3–5 business days after settlement before shipping or activating services.
• Use ACH/EFT primarily for recurring payments with known, trusted customers.
• Avoid using bank debits for one-time or high-value purchases.
• Keep clear authorization records for every transaction.
• Explain to your customers that bank payments take longer to finalize than card payments.

For more information, visit the official rule sources:

• NACHA Operating Rules (United States)
• Payments Canada Rules (Canada)

Note: This article is for informational purposes only. Always confirm settlement timing, return handling, and dispute processes with your payment processor or bank.