Paying with a checking account is a widely used and cost-effective way to move money between businesses even as digital payment methods become more common. Many businesses still rely on bank-to-bank payments (e.g., direct debits, wire transfers, checks) because they’re great for large invoices, recurring billing, and predictable cash flow.

Below, we’ll explain how these systems work, what enables them, and what risks and trade-offs come with them.

What’s in this article?

• Why do businesses typically pay with a checking account?
  
• What systems, authorization flows, and banking infrastructure support checking account payments?
  
• What are the challenges when businesses send or accept payments directly from checking accounts?
  
• How can businesses decide whether checking account payments are right for them?
  
• How Stripe Financial Connections can help
  

Why do businesses typically pay with a checking account?

Paying with a checking account is economical, familiar, and easy for large, recurring payments that drive many business relationships.

Though wire transfers often have substantial fees, other types of bank-to-bank payments are typically less expensive than card transactions. Card fees might seem low at first but can add up on large and frequent B2B payments, while bank transfers might be fee-free or cost a few dollars.

Direct payments from checking accounts don’t expire or hit credit limits. Checks also give payers a measure of control over timing: funds leave the account only after the recipient deposits them and the bank clears the check. With electronic transfers, businesses can time when money moves to some extent.

Many accounts payable systems, approval chains, and audit routines are built around checks and bank transfers, and changing them can take significant effort. Vendors often encourage bank payments because they avoid card fees.

What systems, authorization flows, and banking infrastructure support checking account payments?

Paying from a checking account works because a set of well-worn systems, rules, and verification steps all work together in the background. Here’s what they are and how they help:

Account identifiers and clearing networks

Every checking account has standardized identifiers that tell the system where to send the money. The US uses routing numbers plus an account number. Some countries use an International Bank Account Number (IBAN) that encodes the country, bank, branch, and account.

Those numbers are processed by clearinghouses that batch, route, and settle transfers. In the US, ACH is the core network, with the Federal Reserve or The Clearing House processing files. In Europe, there are various clearing networks; the Single Euro Payments Area (SEPA) (not a clearing network) helps facilitate payments across about 40 countries. In the UK, Bacs processes direct debits. Meanwhile, Canada largely uses Payments Canada.

Authorization and mandates

Before pulling money from someone’s account, businesses must get explicit permission. The rules of the National Automated Clearing House Association (Nacha), which oversees the ACH network, require that US businesses retain proof of authorization. Similarly, in Europe, SEPA Direct Debit requires customers to authorize the payment. These mandates give banks confidence that the debit is legitimate and provide businesses documented proof if a customer disputes a payment.

Bank roles and settlement obligations

The originating bank sends the debit or credit, and the receiving bank posts it to the recipient. Originating banks are responsible for ensuring the transaction is authorized and accurately formatted. This creates a predictable framework for the network.

Risk controls and verification layers

Routing and account numbers don’t have built-in security features; that’s why banks and payment providers use account verification checks, fraud-scoring models, and name-matching tools to confirm ownership and legitimacy. Networks such as ACH have limits on payment-return rates, and rules going into effect in 2026 will implement stronger fraud-monitoring regulations.

What are the challenges when businesses send or accept payments directly from checking accounts?

Though they’re well established, bank payments have risks. Here are some areas to note:

Slower settlement and confirmation

Some bank payments can take one to four days to clear, which means businesses don’t get immediate certainty regarding whether or when funds will arrive.

Risk of payment failures and returns

Insufficient funds, invalid account numbers, and revoked authorizations can trigger returned payments, sometimes days after the transaction is initiated. Each return requires follow-up, adds administrative overhead, and can introduce bank fees or customer churn.

Fraud exposure and delayed disputes

Checks remain a major target for theft and alteration, and unauthorized direct debits can occur if account information is compromised. Customers can challenge an ACH debit for 60 days afterward, and all ACH Direct Debit disputes are final. SEPA Direct Debit gives bank account holders eight weeks to dispute payments.

Compliance requirements and challenges

Handling routing and account data safely, managing return codes, and following network rules adds work for finance and operations teams. Businesses must meet standards for authorization storage, account validation, and dispute handling, and many rely on payment partners to simplify these obligations.

Bank payments differ across regions. Each has its own timelines, formats, and dispute rules, which can complicate scaling unless you use a unified platform that abstracts those differences.

How can businesses decide whether checking account payments are right for them?

Whether checking account payments make sense depends on your transaction patterns, risk tolerance, and customer expectations. Take these steps to determine whether checking account payments are right for your business:

Evaluate transaction size and frequency

Bank payments are useful when you handle large invoices or high volumes of recurring charges because the fee savings stack up quickly. If margins tighten every time a card fee hits, shift those transactions to direct debit to make a difference.

Map payment timing to business needs

Decide whether your operations can absorb a few days of settlement time. If yes, then checking account payments might be a good fit.

Assess customer preferences by segment

For B2B transactions, it might be preferable to use bank transfers for easier reconciliation, while certain customer groups are comfortable with direct debit for rent, utilities, or subscriptions. Offering bank payments alongside cards can surface real adoption patterns without forcing a switch.

Understand your fraud and dispute posture

Bank payments require solid verification, authorization storage, and return-handling workflows. If your team or payment provider can support those safeguards, then incorporating bank payments becomes manageable.

Consider your geographic footprint

If you operate in or plan to expand across multiple regions, you’ll need support for each local bank debit system. Using a platform that handles different payment schemes and relying on one integration can make the decision far more scalable.

Run a cost-benefit model

Compare payment costs, failure rates, and systemic impacts across methods. Many businesses prefer bank payments when the economics are strongest and cards when speed or customer familiarity is more important.

How Stripe Financial Connections can help

Stripe Financial Connections is a set of application programming interfaces (APIs) that allows you to securely connect to your customers’ bank accounts and retrieve their financial data, enabling you to build innovative financial products and services.

Financial Connections can help you:

• Simplify onboarding: Offer a seamless, instant bank account verification process that does not require manual identity and account verification.

• Access rich financial data: Retrieve comprehensive information about your customers’ bank accounts, including balances, transactions, and account details.

• Automate recurring payments: Enable your customers to securely link their bank accounts for recurring payments, improving payment success rates.

• Enhance risk management: Analyze customers’ financial data to make more informed decisions about credit, lending, and other financial products.

• Comply with regulations: Financial Connections helps you meet Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements.

• Innovate with confidence: Build new financial products and services on top of the secure, reliable Financial Connections infrastructure.

Learn more about Financial Connections, or get started today.