A Step-by-Step Guide: How to Send & Receive Electronic Checks

According to Euromonitor International, e-commerce is predicted to become the largest retail outlet in the world by 2021. 

Statistics show that bank transfers remain a highly popular payment method among online shoppers, with up to 20% utilizing some form of bank transfer for online purchases. 

If your business offers an e-commerce function, then you must facilitate as many different types of bank transfer options as possible to increase sales. 

One of these methods is electronic checks. Electronic checks offer a number of benefits to users, such as reduced transaction fees and high levels of security. Therefore, if you are a retailer or a consumer, it is in your interest to be able to send and receive checks electronically. 

However, first, you need to know how to go about sending/receiving electronic checks. Fortunately, this is very easy, and we are about to walk you through all of the steps below. Read on to find out what these are.

The Benefits of Electronic Checks

Electronic checks, also known as e-checks, are digital replicas of paper checks. However, unlike their physical counterparts, they offer a few additional benefits. These are:

  • Enhanced security: digital checks run on the Federal Reserve Bank’s Automated Clearing House (ACH) system, which makes them one of the most secure forms of payments available today
  • Reduced fees: electronic checks typically attract lower fees than many other forms of online payments and bank transfers
  • Fast clearing: because e-checks do not have to be manually processed, they typical clear much faster than physical checks
  • Geographical freedom: unlike paper checks, electronic checks can be utilized anywhere, at any time, facilitating transactions that are free from geographical constraints

Thanks to the benefits of e-checks, they can pose as an attractive payment option for many.

E-checks are also easy to use. Let’s take a look at what you need to get started. 

How to Get Started

If you are a retailer who would like to offer electronic checks as a payment option for customers, you will need to sign up with an e-check processing service that will facilitate the process. 

If you are someone who wants to send e-checks—and why wouldn’t you, considering the low fees and high security—the same applies. While you may be able to make certain payments without a processing service, the easiest option is to sign up with a payment service that will streamline the e-check process for you. 

Whether you are a consumer or a retailer, before you settle on a service, ensure that you check their reviews, as well as their website security authentication. This is displayed as a small green or grey padlock symbol next to their URL at the top of your search engine.

Receiving Electronic Checks

As a retailer, you have the option to receive both e-checks and paper checks, which you can then process electronically. 

For electronic checks, you will need to set up an account with an e-check payment processing platform. From there, you can utilize features such as email links, through which customers can pay, or cart payment options such as e-check payment buttons. 

For the electronic receiving of paper checks, you can opt to purchase processing hardware in the form of scanners, which will automatically convert a paper check and the information it holds into digital form, which can then be processed by your bank through the ACH network. 

Sending Electronic Checks

Sending electronic checks is very simple. Let’s take a look at the steps involved.

Step 1: Filling out the Online Form

The payer will need to fill out an online form with the required details, such as your bank’s routing number and your account number. This form with come via an emailed link, or via an e-commerce electronic check payment button. 

Step 2: Providing a Digital Signature

After this, the payer will need to provide their digital signature if it is asked for. The payer must also ensure that they type their name is it appears on their bank card. 

Step 3: Submitting the Payment

The last step is to submit the payment, after which it will undergo any checking processes and be transmitted through the ACH network. The funds will usually be deducted sooner than with a physical check. Therefore the payer must ensure that they have sufficient funds in their account at the time of the purchase/payment.

Electronic Processing of Paper Checks

To process a paper check into an electronic check in brick and mortar settings, the below steps will need to be completed. 

Step 1: The Payer Writes out the Paper Check

Firstly, the payer will need to write out the check for the payment, and in some cases, supply their identification. 

Step 2: The Payee Scans the Check

The payee will then need to scan the paper check through their hardware. This will convert the paper check into an e-check, after which it will go through the automated channels.

At this point, depending on the options that the retailer has, they will be able to verify whether the check is likely to be valid, based on automated checking processes that can access the payer’s account information.

Step 3: The Money Is Transferred, and the Paper Check Either Remains with the Payer, or with the Payee 

After this, the payment enters the transfer process. The paper check is then voided and is either kept by the payee or returned to the payer along with their receipt. 

Using Electronic Checks Is Easy, Cheap, and Extremely Safe

Thanks to their basis in the Federal Reserve Bank’s Automated Clearing House (ACH) system, and their underpinning legal infrastructure and process inherent to regular checks, electronic checks offer high levels of security. They are also cost-effective and easy to use, allowing for both onsite processing of physical checks into e-checks and the processing of virtual e-check payments that are not restricted by geographical location. 

In short, e-checks offer all the benefits of traditional checks along with the flexibility and ease-of-processing of online payment processes. This makes them an attractive solution for both retailers and consumers. 

If you need to start utilizing the benefits of electronic checks, you can browse our payment processing services, or contact us if you have any questions. 

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