ACH Split
ACH split is the daily or weekly automated debit of a fixed percentage from the merchant's business bank account via Automated Clearing House — the most common MCA repayment mechanism, alternative to processor-based holdback for non-card-heavy merchants.
Why This Matters
ACH split (also called ACH withholding or ACH funding repayment) is the dominant repayment mechanism for non-retail MCA — businesses without significant credit card processing volume use ACH as the holdback alternative. The funder calculates the daily or weekly debit amount based on declared revenue and the agreed holdback rate, then sets up recurring ACH debits via the merchant's bank account. ACH splits are operationally simpler than processor splits but require more underwriting of revenue stability since there's no real-time processor verification of cash flow.
Example
B2B service company with $200K monthly revenue takes a $80K advance at 1.32 factor with daily ACH at $880. Total payback $105,600 ÷ $880 daily = 120 business days. If business slows, the merchant requests a temporary debit reduction — funder may modify based on documentation, or default acceleration if unaddressed.
Frequently Asked Questions
Frequently Asked Questions
How is ACH split different from credit card split?
Credit card split (processor split) routes a portion of card processing receivables directly through the processor before merchant funding. ACH split debits the merchant's bank account daily/weekly via ACH after revenue has been deposited. ACH is more flexible for non-retail businesses; processor split provides better visibility into actual revenue.
What happens if an ACH split bounces?
Bounced ACH (NSF) typically triggers funder attempts to re-debit, late fees, and escalating contact. Multiple bounces can accelerate default and trigger legal collection processes. Funders monitor ACH bounce rates as a key portfolio risk indicator — early-stage bounces often signal stacking or stress.