Taking Checks Online: How eChecks Improve Business Finances
When was the last time you bought something with cash? Or paid your bills with paper checks? If you can’t remember, you’re not alone. From purchasing groceries to paying bills, 82% of Americans now use digital payments to buy goods and services. Therefore, processing online payments have become a necessity to run a viable business in today’s digital economy.
Although convenient for consumers, processing online payments can be costly for merchants. Fortunately, there’s a cost-effective way to accept online payments. Taking checks online offers the convenience of digital payments without their abusive processing fees. In this post, we’ll explain how accepting eChecks can help you save money and improve business finances.
What are eChecks?
OK, so what is an eCheck? eCheck ⏤ or electronic check ⏤ is the digital form of a traditional paper check. Instead of writing out a check and mailing it from the post office, eChecks transfer funds from the payer to the payee’s account electronically. Since the entire processing takes place online, paying with eChecks is much easier, faster, and safer than paper checks.
When you accept checks online, the payment is processed by the Automated Clearing House (ACH) network. ACH is an electronic payment system that transfers funds between bank accounts within the United States. Unlike the card networks that process payments in real-time, ACH processes payments in batches. As a result, eChecks can take one to three days to clear.
How Are eChecks Processed?
Modern technology has made check processing much more efficient and convenient. eChecks are as quick and easy to process as credit cards and other electronic payments. With just a few clicks, anyone can send or receive online checks in seconds. Let’s take a close, step-by-step look at how eChecks are processed:
- Authorization request ⏤ Before a customer can pay you with an eCheck, they must authorize the transaction. You can obtain their authorization through a signed online form, recorded consent over the phone, or a digital signature on the eCheck.
- Information entry ⏤ After obtaining authorization, you can now set up the payment. The customer’s payment information such as account details and the amount to be paid is entered into the eCheck processing platform.
- ACH processing ⏤ Once the payment details are submitted, the transaction enters the ACH network for processing. At this point, funds are withdrawn from the customer’s account and transferred to the merchant’s bank.
- Payment settlement ⏤ On average, ACH payments take three business days to settle into your account. You can accelerate this process by working with an online check processor that gives you quick access to your funds.
How Do eChecks Improve Business Finances?
Now that you know what eChecks are and how they work, we’ll explain why they’re good for your business. When talking about the benefits of eChecks, it’s common for people to discuss its advantages over paper checks. But eChecks are not just superior to traditional checks, they’re also better than most popular forms of online payments.
Here’s how accepting online checks can improve your business finances:
Because of the manual handling and processing required, using paper checks can be time-consuming. Making payments with eChecks is faster, safer, and saves you money. Just how much time can eChecks save? For every $100,000 you process, digital check payments can help you save 353 hours. That’s two weeks’ worth of time saved to work on more valuable tasks.
Reduce Processing Costs
Compared to both physical and digital transactions, eChecks offer the most cost-effective way to accept payments. Processing 500 paper checks will cost you $2,000 per month, while credit card companies can charge merchants up to 4% of the total transaction value. With an average of 0.75% transaction fee, accepting checks online can significantly reduce your processing costs.
Boost Cash Flow
According to a Mastercard report, late payments are the primary reason why 38% of SMBs have cash flow issues. Paper checks’ prolonged processing times and credit card processors’ hold on your funds leave less cash available to meet your financial obligations. eCheck processors make funds available within three business days to put more money in your coffers.
Paper checks are becoming obsolete and some people don’t use credit cards. While only 70% of American adults have credit cards, almost 95% have bank accounts. To pay with eChecks, all you need is a bank account. And since most Americans have personal checking accounts, processing checks online can expand your reach and help you sell to more people.
No Transaction Limits
When you process credit cards, banks will impose transaction and monthly limits on your account to minimize their exposure to risk. This limitation will restrict your sales and prevent you from making more revenue. Unlike credit cards, electronic check payments have no transaction limits. With eChecks, you can sell as much as you want and enjoy unlimited monthly revenue.
Less Payment Fraud
Even with advanced cybersecurity measures, online credit card fraud is hitting record highs. American businesses lost $11 billion to credit card fraud in 2020. When paying with eChecks, your customer is taken to their bank’s login page to confirm account ownership. This helps reduce payment fraud which leads to fewer chargebacks.
How to Pick the Best eCheck Processor
Alright, so now you know how taking checks online can improve your finances. Not only do eChecks cost less to process but they can also help you generate more revenue. So, how can you accept electronic checks? You must partner with an eCheck processor like SeamlessChex. Look for these services to find the best eCheck processing partner for your business:
- Fast settlement ⏤ As we discussed above, eCheck processing can take one to three business days. So look for a processor that gives you the quickest access to your funds. SeamlessChex provides next-day funding to improve your cash flow.
- Bank Verification ⏤ Many online check processors don’t provide verification services. Check verification is crucial for minimizing payment fraud. Seamless Chex offers account ownership verification and funds availability confirmation to help you avoid bad checks.
- Payment Links – Create and send payment links to your customers. No coding is required!
- API integration ⏤ If you want customers to pay you with eChecks, you must get a payment platform that can easily integrate with your website. To ensure a seamless connection, sign up for a service like Seamless Chex that offers API integration.
Accept Checks Online With Seamless Chex
The type of payment you process has a big impact on your finances. Whether inefficient payments like paper checks or costly transactions like credit cards, they all eat into your profits and inhibit business growth. eChecks provide the speed of popular electronic payments while helping you save and make more money.
If you want to take checks online, choose SeamlessChex as your partner. With the lowest processing fees and cutting-edge payment technologies, we offer the most affordable and secure eCheck platform you can find. Sign up for a free trial now to see how our platform can help you save time and money. If you have any questions, contact us to get more help.