In the world of consumer lending, how you process payments isn't just a back-office decision, it can directly affect your efficiency, your customer relationships, and your bottom line. For years, ACH transfers have been the go-to option. But lately, debit card payments are proving to be a smarter, faster, and more flexible alternative.
Here's why it might be time to make the switch.
One of the biggest advantages of debit card payments is speed. While ACH payments can take 2–3 business days to settle, debit card transactions usually clear within 24 hours or less.
That difference can have a big impact. For lenders managing large portfolios, faster settlement can mean quicker access to millions of dollars – money that can be reinvested, used to fund new loans, or just kept on hand for better financial flexibility. It also helps reduce your need for working capital and can even lower your financing costs.
Unlike ACH, which can leave you in the dark for days, debit card transactions offer near real-time visibility. You know right away whether a payment has been authorized or declined.
That instant feedback means you can:
Bottom line: you gain more control, more insight, and fewer surprises.
ACH returns come with costs, usually between $1 and $5 per failed payment. Multiply that across thousands of transactions, and you're looking at serious overhead. Debit card transactions, on the other hand, don't have return fees. If a payment fails, it just doesn't go through. No penalties, no paperwork.
On top of that, managing ACH returns eats up staff time: reconciliation, error tracking, follow-up calls. By shifting to debit cards, you can reduce or even eliminate much of that work.
Staff time for return processing (estimated at 10 minutes per return at $25/hour):
1,000 × 12% × (10/60) × $25 = $500
Collection efforts for failed payments (estimated at 25 minutes per instance):
1,000 × 12% × (25/60) × $25 = $1,250
Cash flow opportunity cost (2-3 day delay on $220,000 at 8% annual return):
$220,000 × 8% × (2.5/365) = $120
These considerations show a net effective cost difference at breakeven or more impactful savings on Card versus ACH.
One of the hidden pain points with ACH payments is the reconciliation process. ACH returns don't happen in real time, they can show up days after the payment was initiated, long after you've marked the transaction as "complete."
This lag creates confusion in your records and headaches for your accounting team, especially when trying to close out month-end books or track down discrepancies.
Every delayed return means someone has to step in, dig into payment logs, and manually correct or reclassify the transaction. Multiply that by hundreds or thousands of payments per cycle, and you're looking at serious operational delay.
Debit card payments eliminate most of that chaos. Because the payment is authorized (or declined) instantly, you know the outcome right away. That means:
In short, your team spends less time untangling issues, and more time focusing on strategy and analysis.
When an ACH payment fails, it often kicks off a frustrating domino effect. You might not even know about the failure for days, and once you do, there's a long to-do list:
All of this adds up to extra time, extra labor, and sometimes, an awkward customer experience.
With debit cards, failed payments are immediately visible. If a transaction is declined, you'll know in real time, often while still on the phone or live chat with the borrower. This makes it easier to:
It's faster, smoother, and less disruptive for everyone involved.
ACH systems don't offer much flexibility when it comes to retrying failed transactions. There are limits on how often and when you can retry, which often means you miss the window when a customer might actually have funds available.
Debit card payments are different. With customer consent, you can time retries more strategically, maybe right after payday, or based on known payment behaviour. This gives you:
Instead of chasing payments, you're working smarter.
Disputes happen, but how you handle them can make or break your collections process.
With ACH, the dispute process is often tilted toward the consumer. It's vague, difficult to contest, and timelines can drag on. For lenders, that often means limited recourse and higher write-offs.
Debit card disputes offer a more structured, transparent process. You benefit from:
For lenders who maintain thorough records, this structure makes a meaningful difference in how many disputes are resolved in your favour, and how much revenue you preserve.
Let's face it: today's borrowers expect the same speed and simplicity from financial services that they get from food delivery or shopping apps. ACH doesn't meet that bar, but debit cards do.
When borrowers use their debit card to make a payment, they get:
These seemingly small things build trust and satisfaction, and that leads to better repayment rates, fewer complaints, and stronger long-term relationships.
Switching from ACH to debit cards as your primary payment method isn't something you do overnight. It takes planning and coordination across teams. Here are a few things to keep in mind:
Yes, it takes some work, but the benefits pay off quickly, especially if you're processing payments at scale.
ACH has served its purpose, but it's showing its age. In today's lending environment, debit cards offer a faster, smarter, and more customer-friendly way to collect payments.
From faster settlements to fewer disputes, simpler operations to better borrower experiences – this is more than a minor upgrade. It's a strategic shift that can give your organization a real edge.
If you're looking to reduce costs, maximize efficiency in workflows, and meet the expectations of today's borrowers, now's the time to make the move.
1. Aren't debit card fees higher than ACH fees? Good question—yes, per-transaction fees for debit cards can sometimes be slightly higher. But when you factor in the hidden costs of ACH (returns, staff time, delays, collections), debit cards often come out ahead. You're paying for speed, reliability, and fewer headaches—and that adds up to real savings.
2. What happens if a debit card payment fails? If a debit card payment is declined, you'll know instantly. That lets your team take action on the spot—whether that's asking for a different card or rescheduling the payment. No waiting days for return notices. It's more efficient for you and less frustrating for the customer.
3. How hard is it to switch from ACH to debit cards? It takes some coordination, but it's not as complicated as it might seem. If your systems and payment processor support card payments, it's mostly a matter of updating workflows, training staff, and communicating with customers. And once it's done, the day-to-day gets way easier.
4. Do borrowers actually prefer paying with debit cards? Yes—most do. It's familiar, fast, and gives them immediate confirmation. Especially for younger borrowers, it's what they expect from any digital payment. When the experience is smoother for them, repayment rates tend to improve for you.