When individuals think about checks, they imagine dinosaurs, dodo birds, and other things that are long dead. While paper checks do have unfinished business, eChecks are alive and growing. In actual fact the number of 29.1 billion eCheck payment processing in 2021 according to Nacha the company responsible for the eCheck network.
What Is Echeck Payment Processing?
E-Checks are an electronic version of a paper check which can be utilized to pay via the internet or an Automated Clearing House (ACH) network. Through the ACH network, eChecks offer the possibility of transferring funds between banks without having to depend on credit card networks.
While eChecks generally conform to the guidelines and practices that are employed in the current banking system, some manual processes of receiving money aren’t just eliminated, however, the money is transferred to your account quicker.
The latest security features are available that can be used to support checks and can be used to service customers of small and medium companies. eChecks are best used in cases where paper checks would typically be utilized.
How Do Echecks Work?
The entire process of accepting payment is done electronically, it provides security and convenience, but also ways to accomplish it:
1. Authorize the transaction
The person who initiates the payment has to allow the amount that the recipient wants to be taken out of the account. The payment can be authorized by a signed order form or recorded voice approval or through an online payment form.
2. Pay the bill
Once the client approves the payment the merchant will start the process of payment with the input of the account details (checking account or routing number.) into the payment gateway online.
3. Complete the transaction
Once the financial information has been confirmed at the time of verification by the credit card gateway, the seller “saves” and “submits” the payment to their bank. The money is then transferred through the ACH network to start the eCheck payment processing.
4. Confirm payment
In the end, the eCheck transaction value is then withdrawn from the customer’s account on a regular basis. The money is then transferred to the bank account of the business. A receipt for payment confirmation will be sent to the client.
There are various reasons eChecks are becoming more popular one of the main motives is convenience. It is no longer necessary to go to your bank.
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Benefits of Echeck Payment Processing
Electronic Checks have a myriad of advantages that make them appealing to both customers and businesses. If you’re considering accepting this payment method think about the following points:
- They’re safer than paper cheques or credit cards. As per the Federal Reserve, payments made via the ACH network are the least susceptible to fraud in terms of the amount.
- They are less expensive than credit cards. E-Check fees generally range from 0.5 percent to 1.5 percent of the amount spent. Compare this to processing charges for credit cards, which are typically 1.5 percent to 3.5 percent.
- They permit recurring payments. They are a low-cost method to offer your customers the option of auto-pay or monthly subscriptions.
- They’re safer than cards used for recurring payments. Electronic checks rely on bank account details instead of credit card numbers which could be lost, stolen, or expire. So, payments are more likely to be accepted.
- They’re more efficient than traditional paper checks. E-Checks usually take between 3-5 days to complete. They’re usually processed before a paper check gets to the post office.
The Differences Between eChecks and Paper Checks
Checks and paper checks appear to work similarly However, there are distinct distinctions between these two payment methods.
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One of the most notable is that eChecks are mostly used for online transactions, while check paper is used only to conduct transactions in person.
- eChecks can go through the process of transaction faster than paper checks since they have fewer steps
- E-Checks are safer than paper checks as they’ve added security features (authentication and digital signature, encryption, etc.)
- Checks made with paper are more prone to human errors or criminal activity (forgery and stolen or lost checks, etc.)
- Paper checks are more expensive than electronic checks (printing shipping, handling, and so on.)
- eChecks offer unlimited data storage capabilities, while paper checks require users to enter data manually in order to save records
It could be that because more payments are shifting to the digital market and fewer customers are still using checks in the form of paper, one could only conclude that checks made with paper are likely to be discarded in the near future.
But this is not the situation. Checks made with paper are utilized by a variety of companies across a range of sectors, and consumers continue to use checks to pay for payments, as well as rent or mortgage checks.