What is an eCheck and why you should start accepting it
An eCheck, or electronic check, is simply a modern take on the traditional check, which allows consumers to transfer funds from their bank to a business’s bank. Rather than having to be processed manually like a paper check, however, eChecks are processed electronically.
But aren’t checks a thing of the past? While the convenience of credit and debit cards have definitely reduced the usage of checks, consumers still prefer to use the payment form for many scenarios . And there are circumstances that make accepting checks more beneficial for merchants, as well.
Let’s start with explaining what an eCheck is and how it works. An eCheck may be used in-store, where a merchant scans a customer’s written check, or online where the customer enters their banking information in a secure portal. In both scenarios, the customer’s bank account information, along with the purchase amount, is electronically transmitted through the Automated Clearing House Network (ACH) to initiate a withdrawal from the customer’s bank account and a deposit into the merchant’s bank account.
The beauty of an eCheck is that it’s immediately known if the customer has insufficient funds for the purchase, thus avoiding a returned check. ACH transactions are secure because the system is governed by the Federal Reserve that moves funds electronically between entities. The U.S. Treasury has selected eChecks as the only electronic payment method available to make large payments on the internet. ACH is also used for debit card transactions, direct payroll deposits, government payments such as Social Security, and much more.
Accepting eChecks offer merchants many benefits including:
- Lower transaction costs than with credit cards
- No limit to the transaction amount, making eChecks a great payment choice for larger ticket items
- Easier recurring payments with less breakage than credit cards since bank account numbers rarely change, while credit cards are reissued frequently
- Faster processing and deposits than with traditional checks
- More secure and cost-effective than traditional paper checks
- Ability to safely accept out-of-state and international eChecks
While eChecks are beneficial to most every type of business, they are especially good for businesses that:
Additionally, many people simply prefer to pay by check. So, if you’re going to accept checks, there’s no reason not to accept eChecks, which allow for real-time funds authorizations, help reduce the risk of fraud and returned checks, and facilitate faster payments.
If your business is not yet accepting eChecks, now is a good time to start. Your payment processor can provide you with details and processing equipment for in-store and online transactions, and provide any necessary training. Integrating eChecks into your payment options is quick and easy, and can positively affect your bottom line with greater sales and more streamlined accounting.