As we continue to move into a more “electronic world” the speed at which payments take place has become vitally important. Echecks or electronic checks allow businesses and customers to make payments quickly.
Some vendors and customers are not comfortable providing their banking information for wire transfers or ACH payments, but they still want to receive their payments in a timely manner. With eChecks, not only will they receive their funds right away, they can control the receiving, processing, and depositing of that payment.
E-checks are a form of electronic payment that resembles a paper check but in digital form. By using eChecks, merchants and vendors alike can receive their funds quickly as opposed to waiting for days to receive a paper check through the mail.
Here are some commonly posed questions about eChecks.
Your A’s To Your Q’s About eChecks
1. What Is An eCheck?
Echecks, also referred to as electronic checks, are a type of payment where funds are drawn electronically from a sender’s checking account. It is then deposited into the receiver’s checking account.
The funds are transferred over the ACH (Automated Clearing House) network. The ACH network is an electronic funds transfer system that processes financial transactions for e-commerce customers, businesses, and individuals.
2. How Does It Work?
Electronic check processing works a bit similar to paper check processing. The difference is that eCheck processing is faster, more eco-friendly, and cost-efficient. You don’t waste time filling out a check and you definitely don’t waste paper. The client simply fills in and processes the eCheck electronically.
3. How Do You Process An eCheck?
- Request Authorization: To process an eCheck transaction, a business needs to request authorization. The authorization request can be a signed order form, an online payment form, or an agreement over the phone.
- Set Up Payment: Once the authorization is complete, a payment gateway (online payment processing software) accepts the information on the payment.
- Requiring ACH: Once the payment gateway receives the data on the payment, the ACH transaction process begins.
- Confirming The Payment: Here, the funds are automatically withdrawn from the customer’s bank account. When the payment is completed, the software sends a final receipt to the client.
4. When Does A Merchant Receive Funds From An eCheck Payment?
Depending on the payment service provider or (PSP), it normally takes up to 48 hours. If the payer has sufficient funds in their checking account, the merchant can receive their funds within 3 to 7 business days.
5. What Are The Costs Of Sending An eCheck?
To process an eCheck, do note that different businesses will charge different fees. On average, an eCheck transaction fee can range from $0.30 to $1.50.
6. What Are The Benefits Of eChecks?
The most beneficial aspect of accepting eChecks over credit cards is that eCheck processing fees are lower. Here are additional benefits:
- High-speed processing
- Greater accuracy in processing
- Environmentally friendly
7. What Do I Need To Begin Accepting eChecks?
A business must work with a payment processor or payment gateway, as well as a financial institution that can enable and support these types of transactions.
8. What Are The Differences Between eChecks And Credit Card Payments?
The most notable difference is that eChecks use ACH to transfer funds instead of using credit card networks. This makes processing fees considerably lower.
For eCheck acceptance, there are no credit card interchange fees. Fees can be as low as 10 cents per transaction. This is highly beneficial for businesses that accept recurring or large payments.
There is a growing interest in eChecks which could indicate bigger shifts towards more electronic payment options as opposed to more traditional payment methods. It would be interesting to see how eCheck adoptions continue to evolve in the future