An eCheck (electronic check) is the digital version of a paper check, with a multitude of advantages for customers and merchants. eCheck payments use the ACH (Automated Clearing House) network, so eChecks are a type of ACH payment but differ slightly from other types of ACH payment, mainly because with an eCheck, the customer always initiates the transaction. Other types of ACH payments can be initiated by either the customer or the merchant.
Customers authorize an eCheck in a number of ways. It can be done with a signed contract, the acceptance of a website’s terms and conditions, or through a recorded phone call. This makes eChecks practical for both brick-and-mortar and online merchants.
Because eChecks carry very low fees compared to credit and debit cards, merchants favor them for big ticket items — the savings can add up substantially if your business involves large, single transactions or recurring billings for yearly or multi-year subscriptions.
eChecks are excellent options for merchants in high risk industries, an area in which we specialize. For high risk merchants, obtaining a merchant account for credit card payments can be difficult. In contrast, the qualifications to accept eChecks boil down to having a business bank account in a U.S. financial institution. Fees for processing eChecks may be higher for high risk merchants, but are still affordable and give their customers a safe, convenient option for payment. And, because eChecks are secure — see the following paragraph — they help protect merchants in high risk businesses from being victimized by fraud.
Versus paper checks, eChecks settle much more quickly (eCheck settlement time generally takes 48-72 hours). In addition, the verification process for eChecks can identify fraudulent payments (for instance, when the name, address and account numbers don’t match) — a service that saves merchants a great deal of aggravation and helps prevent serious financial losses.
From the customer’s point of view, eChecks are quite convenient. The only information needed is the person’s name on the bank account, the bank name, the account number and the routing number. And, while the information is simple enough, data transmission is very secure using the ACH network, helping to minimize the risk of fraud — obviously a big benefit to customers and merchants alike.
If your business routinely processes credit card payments, adding eChecks as an additional option makes good business sense — we will assist you in setting this up with your current payment processor or a new one. One advantage of eChecks is giving customers flexibility. For instance, if a customer is maxed out on a credit card, paying by eCheck might make the difference between making the sale right now and maybe not making the sale at all. In addition, some people dislike paying by credit card because of fears of identity theft or having their credit card information used for telemarketing, spam emailers, etc. To make sure all customer payment preferences are met, eChecks are extremely valuable.
If you have additional questions about eChecks or would like to add them to your lineup of payment options, contact us now. We will get you up and running with eChecks quickly.