Small businesses ditching credit cards for ACH and real time

Small businesses are quietly staging a mass exodus from credit cards—and it’s not because they’ve found something better. It’s because they can no longer afford to stay.

While payment industry headlines celebrate innovation and digital transformation, the real story is economic survival. SMBs are abandoning credit card processing at unprecedented rates, driven not by tech enthusiasm but by unsustainable fee structures that can consume 3% or more of every transaction. At the same time, governments worldwide are building real-time payment infrastructure specifically designed to bypass traditional card networks entirely.

The fee trap that’s bleeding SMBs dry

Credit card processing fees range from 2.6% to 3.5% plus fixed fees per transaction—but that’s just the beginning. For SMBs processing $20,000 monthly in card transactions, this represents $520-700 in pure fee leakage before considering additional costs like chargeback fees, PCI compliance, and equipment rental.

The problem runs deeper than fees alone. Credit card payments create cash flow gaps—funds typically take 1-3 business days to settle, forcing businesses to manage working capital around payment timing. When additional fees like foreign transaction charges or premium processing rates apply, total costs can push above 6% per transaction.

The problem runs deeper than fees alone. Credit card payments create cash flow gaps—funds typically take 1-3 business days to settle, forcing businesses to manage working capital around payment timing. Meanwhile, 30% of SMBs report they would use cards more frequently if they offered industry-specific benefits, revealing a fundamental mismatch between what payment providers offer and what businesses actually need.

The reliability issue compounds these problems. Recurring billing becomes challenging when customers’ cards are cancelled, maxed out, or expired, causing subscription payments to fail and requiring costly manual intervention.

The global infrastructure revolution

The breakthrough came when governments and central banks worldwide decided to build alternatives to traditional payment rails. The Federal Reserve’s 2023 launch of FedNow joined existing systems like Europe’s SEPA instant credit transfers, India’s UPI network, and similar initiatives across Asia-Pacific—creating a global ecosystem of real-time payment alternatives.

This isn’t just American innovation. In Europe, instant payments constitute 12% of credit transfer volume in the Single Euro Payments Area, with projections to reach 45% of SEPA’s 23 billion annual transactions by 2027. India’s UPI processes over 10 billion transactions monthly, while countries across Africa, Latin America, and Asia are launching their own real-time payment systems.

In March 2025, the U.S. Federal Reserve’s migration to ISO 20022—the internationally accepted messaging standard—created seamless interoperability between domestic and international real-time payment systems. This technical milestone effectively eliminated the infrastructure barriers that previously made ACH transfers slow and limited their global reach.

The numbers don’t lie

Market data reveals a fundamental shift. ACH processing costs average just $0.29 per transaction, while credit card fees range from 2.6% to 3.5% plus fixed fees per transaction. For a $1,000 payment, that’s the difference between paying 29 cents versus $26-35 in fees—a gap that becomes even more significant at higher transaction volumes.

The market is responding predictably. Real-time payments accounted for 266.2 billion transactions globally in 2023, growing 42.2% year-over-year. More telling: about half of businesses globally have moved or will change financial services providers to access real-time payments.

Enterprise-grade capabilities for everyone

What’s significant about this transformation is how it’s democratising enterprise-grade treasury capabilities. Mid-size manufacturing operations are increasingly abandoning the traditional mix of expensive wire transfers for urgent payments and high-fee credit cards for routine purchases. Instead, they’re processing same-day ACH transfers and real-time payments, eliminating both the urgency premium of wires and the percentage drain of cards.

96% of manufacturing companies expect to use real-time payments for outgoing payments instead of paper checks—but more importantly, they’re redesigning entire supplier payment workflows around instant settlement capabilities that bypass traditional card networks entirely.

This shift becomes critical when businesses realize this isn’t about payment modernisation—it’s about competitive survival. The most successful international operations are taking a systematic approach: calculating their true cost of card-based payments, then methodically migrating high-volume transactions to real-time rails.

The inflection point

The scope of this transition becomes clear when examining the numbers. By 2028, real-time payments are expected to replace as much as $18.9 trillion in business transactions that currently use ACH and checks. But the real disruption targets credit cards used for international B2B transactions.

In Europe, instant payments could reach 45% of SEPA’s 23 billion annual transactions by 2027 if regulators proceed with anticipated adoption incentives. That represents trillions in transaction volume migrating away from high-fee card rails toward near-zero cost instant transfers.

No going back

There’s no going back once businesses taste this level of cost efficiency. Early adopters are gaining significant cost advantages across their payment operations—margins that compound rapidly in competitive markets. Meanwhile, payment providers unable to offer real-time alternatives face client exodus as SMBs discover they’ve been subsidising an unnecessarily expensive payment infrastructure.

Organisations achieving the greatest success in this transition recognise this fundamental shift isn’t about embracing innovation—it’s about escaping payment structures that constrain growth through high fees, operational complexity, and cash flow disruptions. As central banks worldwide invest billions in real-time payment infrastructure, the question isn’t whether to adopt instant payments, but how quickly businesses can migrate before competitors gain an insurmountable cost advantage.

In five years, will your business be among those that recognised the fundamental economics shift and acted, or those that kept paying premium fees until competitors gained an insurmountable cost advantage.

Baxter Lanius is CEO of Alternative Payments, a B2B payment infrastructure company specializing in automated payment solutions for mid-market businesses. He has over a decade of experience in payment technology and financial services.

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