How Electronic Check Payment Processing Works

Feb 17, 2017

If you have been running a business for a while, the chances are high that a customer has requested to make payment using an eCheck. However confusing merchants find this method, they often choose to let their payment processors handle the technicalities. And when disputes later arise, the trader is left with little to do, other than concede to the processor’s demands.

As a business owner, therefore, it is important to have at least a little grasp of what goes on when a client pays through an eCheck. But first, let’s answer the obvious question: what is an eCheck?

An electronic check is a form of payment where a customer’s funds are transferred into a merchant’s account over the ACH (Automated Clearing House) network. To process such payments, a trader requires an eCheck processing, through which payments made by eChecks can be withdrawn directly from the client’s bank account.

How to get an eCheck merchant account

If your business already accepts credit cards, your current merchant account provider might be willing to incorporate ACH processing to your already existing system. Companies such as eMerchantBroker offer both cards and eCheck payment services to online businesses.

Once you’ve identified a processing account that agrees with your needs, it is time to fill out the application. The information required will include your estimated processing volumes, as well as the years your business has been in operation. The application process is usually fast and easy, and approval typically takes a few days.

How eCheck processing works

In some ways, electronic check processing is similar to paper check handling, albeit faster and more efficient.

Processing an eCheck generally takes place in the following steps.

  1. The purchase is authorized

To approve the purchase, a customer can either fill out an online form or talk to the merchant directly through a recorded phone call. Only after authorization can the trader pass the check information to the payment processor.

  1. Payment is finalized

The payment processor oversees the direct withdrawal of the funds specified by the check from the customer’s bank account, and prints out a receipt.

  1. Funds are deposited into the merchant’s bank account

It takes two to three days after initiating the transaction for the check to clear and the money to be deposited into the merchant’s account.

Recurring payments with eChecks

Credit cards might be the most common way to make payment online, but when it comes to recurring transactions, eChecks make the most sense. Consequently, ACH billing is gradually gaining traction among property managers as a reliable way to collect monthly rent.

Businesses that charge customers fixed fees at every end of a specified duration should, therefore, adopt eChecks as a primary payment method.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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