Stripe, Xero form ACH payment integration

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Xero and Stripe are once again are linking up to create tighter integration between their services. The two cloud software application companies announced Tuesday that they'll allow joint customers to accept Automated Clearing House (ACH) bank transfers to speed up payments.

To activate the service, Xero users can login and connect to the Stripe ACH bank transfers as a payment gateway. Once connected to an invoice theme, the system enables the "Pay Now" button on an invoice that's sent to customers.

Stripe uses a form of tokenization to keep the sender's bank details private from the recipient of the invoice. The invoice payee then logs into their bank account and pays the required amount. Once the payment is cleared, the funds are sent to the Xero customer's bank account, the transaction details are matched and reconciled, and the invoice is marked as paid.

The use of same day ACH debit transactions became available in September, and by December, ACH debit and credit transactions totaled 15.2 million, a 51-percent increase above November, according to data from the Electronic Payments Association. Despite increasing popularity, Stripe said the payment method is still difficult to set up on the backend.

"While ACH is one of the most efficient payment methods for businesses, it has been a traditionally cumbersome option to set up," said Cristina Cordova, head of business development at Stripe. She said partnering with Stripe makes ACH bank transfers "easily available to the millions of subscribers that rely on (Xero's) software."

The partnership expansion follows a move last year between the companies to offer automated reconciliation services. The functionality enabled Xero to automatically match multiple transactions to a statement line, identifying payments and fees associated with a corresponding Stripe payout.

More broadly, the integrations are part of a push by Xero to expand the ways AI and automation are used throughout all aspects of business. The pitch is that these technologies allow small business owners to spend less time on paperwork and more time serving customers.

Last March, Xero introduced a machine learning-based automation system designed to simplify and improve the way invoices are filed. Xero claimed the technology was the first example of personalized machine learning in an accounting system. The company has since proclaimed that AI and machine learning would be at the forefront of its platform offerings moving forward.

"Our ultimate goal at Xero is to make sure small businesses are getting paid as quickly as possible, while making the experience from set up to reconciliation seamless," said Xero CTO Craig Walker. "With the introduction of Stripe ACH, we are extending the ways a business can get paid into their Stripe account while maintaining the integrity of the first-class experience we've built between Stripe and Xero."

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