On this page, we will educate you on what an eCheck is, how it works, and how to utilize eCheck as a payment method for high risk businesses. We find that customers enjoy the flexibility to pay using as many methods as possible, with high risk eCheck being the second most popular (after credit cards). While we understand that most customers would rather pay with credit cards, offering high risk eCheck processing has many benefits as outlined below.
High Risk eCheck Processing
What Is an eCheck?
An eCheck is a form of online payment where money is electronically withdrawn from customers’ personal checking accounts and deposited into merchants’ business checking accounts.
How Does eCheck Processing Work?
eCheck processing is similar to paper check processing, only much faster. Instead of a customer manually filling out a paper check and sending it to the business he/she needs to pay, today’s technology allows the process to happen electronically, saving time and paper waste. eChecks also have a higher level of verification, which results in fewer instances of check fraud. Using eCheck for high risk payments has helped many merchants stay in business and process payments for products that may not be approved for traditional credit card processing. At Performance Card Service, we partner with several eCheck providers and strive to place your account with the best high risk eCheck solution that fits all your business needs.
Depending on the specific eCheck solution, there are different methods of processing an electronic check:
- Some of our eCheck solutions print all of your customers’ checks and ship them via FedEx to your bank for deposit. Funds are typically deposited into your business bank account within 1–2 business days, depending on the bank.
- Some of our other eCheck solutions allow you to print checks yourself, saving 24–48 hours in deposit time. You can then deposit your checks via your mobile device or in person at your local bank right away.
Both of these processing methods use check verification services done in real time. Once the payment clears, you can render your service or ship your product.
The eCheck processors also offer enhanced check verification services for an additional fee that can help with reducing these occurrences.
These are the basic steps in the eCheck payment process:
- Request Authorization. Your business needs authorization from your customer to make the transaction. This can be done via an online payment form, a signed order form or over the phone.
- Payment Setup. After the authorization is complete, your business manually inputs the payment information into your online eCheck portal, or it’s done automatically through your website’s shopping cart.
- Finalize and Submit. Once payment information is properly sent to the eCheck provider, it processes the payment.
- Payment Confirmation and Funds Deposited. The payment is automatically withdrawn from the customer’s bank account, at which time you can send the customer a receipt. Funds are typically deposited into your business bank account within 1–2 business days, depending on the bank. Once the payment clears, you can render your service or ship your product. Keep in mind, this does not mean the check is 100% valid. Some banks will not verify a check instantly, and sometimes a customer may withdraw money from his/her account or close the account altogether, causing the check to bounce. The eCheck processor offers enhanced check verification services that help to reduce these occurrences (more on this below).
Four ways your customers can send an eCheck payment:
- Virtual Terminal. Through your new eCheck merchant account portal, you manually enter a customer’s checking account details (that were received over the phone) to process the payment. This also can be done with a batch of multiple eChecks on a nightly basis.
- Email Invoicing. This method involves sending your customer an email with a link he/she clicks to process the payment on the eCheck provider’s interface. Some customers like this because they initiate the process and don’t have to share their checking account information.
- Payment Buttons. Add HTML “payment buttons” anywhere on your website, providing customers access to an order page for instant payment.
- Traditional API. Our eCheck providers offer a traditional API (Application Programming Interface) to directly integrate your shopping cart. Plug-ins also are available for Magento, WooCommerce and OpenCart to make this integration even easier.
How Much Does Processing an eCheck Cost?
We partner with several eCheck providers that charge different fees to process an eCheck based on your business type and monthly volume. Rates and fees for high risk eCheck processing usually range from 1.99% – 4.5% plus a $0.25 – $0.49 transaction fee. Check verification via a live operator is an optional service — the fee is usually $3 per check, but it’s worthwhile if you have issues with bad checks from customers.
What Are the Benefits of Accepting eChecks from Customers?
- Since eCheck is not governed by Visa and MasterCard, merchants don’t have to worry about these card associations closing their accounts.
- The pricing for high risk eCheck processing is usually much cheaper than processing on a high risk credit card account, and there is no reserve.
- Funding is usually one day! So, no more waiting several weeks to get paid on a credit card transaction using a high risk processor.
- Integration is easy with plug-ins for WooCommerce, Magento, OpenCart and many others. Several other methods of payment acceptance don’t require integration, therefore allowing you to build your eCheck customer base before spending time with integration.
- When given the chance, approximately 10% –25% of customers use eCheck — and many of our merchants are offering a small incentive (e.g., free samples, 5% discounts) to customers who use it.
- Transaction declines won’t be a huge issue, as with offshore processing in jurisdictions such as China.
- Friendly chargebacks are reduced since customers recognize the transactions on their statements.
- The processor is in the U.S. — with U.S. banks and U.S. time zones.