Could ACH be a viable payment network for in-person retail purchases?
Answer by Gus Fuldner:
It is today. Many merchants (particularly grocery stores) in the US offer what is called POP ACH (Point Of Purchase).
- The consumer writes a check to the merchant.
- The merchant runs the check through a check scanner that reads the MICR line (ABA routing number, account number, and check number) and keys in the amount.
- Cashier hands back the check to the customer in a voided form.
- Merchant's (via their bank) generates an ACH debit using the "POP" transaction type.
POP transactions are legally considered ACH transaction and subject to laws governing ACH transactions not checks (such as the UCC). The problem with POP transactions (like checks) is that it is that the ACH transaction may be denied for insufficient funds.
A small number of merchants (notably) offer store-branded decoupled that settle via ACH as well.
While these are ways that ACH is used for in person retail transactions, they are wrapped in other packages (e.g., the paper check that gets voided, the decoupled debit card). I don't expect a pure ACH transaction where you tell the cashier your routing and account numbers to gain any transaction because the error and fraud rates would be too high.