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How Electronic Check Payment Processing Works

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 To process such payments, a trader requires an eCheck processing, through which payments made by eChecks can be withdrawn directly from the client’s bank account.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.