What is an Echeck?
April 8, 2020 | Merchants | Dustin
An eCheck or electronic check is exactly what their name implies: electronic versions of paper checks. Instead of paying with a traditional check, payment is processed online through Automated Clearing Houses (ACH). Customers who select an eCheck as their payment option enter their bank routing number and account numbers to complete the eCheck transaction.
The merchant uses their standard payment gateway to encrypt the banking information and process payment. Funds are removed from the customer’s account by the Automated Clearing House network and deposited into the merchant account. This alternative to traditional or electronic payment options serves as a convenient way to process online payments.
Why are eCheck transactions used?
eChecks are used to speed up the payment processing time when compared to traditional checks. Many of the steps to process and deposit traditional checks are eliminated with electronic checks, making eCheck processing faster. New industries are welcoming the use of electronic checks for depositing and purchasing options. For example, in Europe, there are even casinos accepting echecks.
Electronic checks also enable consumers to pay online without having to mail in their paper check or deliver it in person. Money can be moved much quicker this way which speeds up purchasing and online transactions. Businesses can receive their funds sooner and consumers can receive their goods or services earlier as well.
Are eCheck payments safe?
Electronic payments are standard in this day and age. From online shopping to electronically paying bills, there is a great need for secure and reliable payment processing through electronic means. eChecks offer an efficient way to transfer funds from payer to payee, but are they safe?
Electronic checks are steadily growing in use. While many people have no qualms about entering their credit or debit card information online, some pause to consider whether or not eChecks are safe. It may be surprising to learn that eChecks are considered a very safe form of online payment, and they may be safer than traditional checks in some ways.
eChecks vs. paper checks
Paying with a paper check increases your risk for fraud. More people come into contact with a paper check through the payment process, making it a high risk for fraud or criminal activity. With eChecks, fewer people come into contact with sensitive financial information. Routing numbers and account numbers are sent directly to the financial institution of the payee, protecting both the business and the consumer.
Part of what makes eChecks so secure it the payment process. eChecks move through four stages, including authorization, processing, finalization, and deposit.
- The authorization stage protects the payer by ensuring the transaction is valid.
- Processing involves the transference of funds between bank accounts.
- Finalization verifies that all account information is accurate.
- The deposit stage completes a successful transaction, and both parties are alerted that payment was processed.
- A receipt provides the final documentation for the eCheck transaction.
Many businesses may find it easier to accept eChecks than paper checks. If merchants receive a paper check with missing information, such as a date or signature, it can be a headache to process payment and clear the deposit. With electronic checks, incomplete or invalid information halts the transaction. Consumers have the chance to rectify any issues before the transaction is initiated.
Benefits of eChecks
eCheck transactions are beneficial for all parties involved. Online payments clear faster than paper checks, and banking information is encrypted and secure. Businesses that use payment processing software can benefit from accepting eChecks because their software can automatically detect fraud and flag suspicious transactions.
Customers can enjoy peace of mind knowing their payments are processed securely and information is passed directly to the financial institution. They do not have to fear about their check and sensitive information falling into the wrong hands.
Finally, eChecks allow merchants to offer a wider range of payment options. With more options, businesses can increase their chances of making a sale and provide added convenience to their customers.
April 8, 2020 | Merchants | Dustin