Did you know that eCommerce sales now account for 14.3% of all retail sales? The trend is clear: business is going virtual. That’s why it’s so important to provide a wealth of options for payment. It’s also why you need to know how eChecks work if you’re going to do business online.
Customers and clients expect simplicity. If it’s too complicated, you might just lose a sale. eChecks are one of the quickest and most efficient ways to keep it simple.
What Are eChecks?
An eCheck, also known as an electronic check, is a way to pay online. The payer’s money is automatically taken out of their checking account, sent over the ACH network, and credited into the payee’s bank account.
The customer uses their bank routing and account number to submit a payment online.
Is There a Difference Between eChecks, EFTs, and ACH Payments?
EFT, which stands for electronic funds transfer, includes many options. They can be direct deposits, wire transfers, ACH disbursements, and electronic benefits payments for transfers.
ACH stands for automatic clearing house. An ACH is an automatic network that’s used in the U.S. by financial institutions. An eCheck is an EFT that uses the ACH network to process payments.
How Does Electronic Processing Work?
How eChecks work is very similar to regular checks, except they’re a much quicker way to process payments. Everything happens online. There’s no need for paper checks, and your customer’s information is completely secure.
It’s also much faster and less expensive than a traditional check. That’s because there’s no paper changing hands. There’s also no postage, no bounced check fees, and no hassle.
It works using a very simple process. If you want to accept checks online, your first step is to sign up with a check processing company. Connect your bank account, then use their system to send and accept eChecks via email, online, or by phone.
How do eChecks work from the perspective of your customers? Your customer enters either their checking account routing and account number or they can pay using their online bank login.
You can also send payments using the same process. You’ll pay a small transaction fee, but it’s much lower than the total cost for mailing a paper check.
What Are the Benefits of eChecks?
The main benefit is how quickly they’re processed. You often get funded either same or next-day. In addition, you may also see an increase in sales because customers prefer various payment options.
There are a lot of reasons eChecks are a viable solution for your business, such as:
- They can be used by all industry types
- They’re one of the most secure payment options
- They work with checking or savings accounts
- Digital checks cost less than many other payment methods
- It’s easy for customers, clients, and the business owner
- They’re protected by banking regulations
There are so many ways your business will improve once you begin exploring how eChecks work. Of course, you can use it for more than your business. People pay their rent, doctors, and more using this form of online payment processing.
Are They Safe?
You might be wondering how safe they are, but electronic encryption has greatly improved security for online transactions. Paper checks leave your numbers hanging out there for anyone to see. That means you’re exposed every time your check changes hands.
Did you know that 74% of organizations in a participating study said they experienced check fraud in 2017? Less than half were targeted by electronic payments.
A paper check can always be handed in with missing information such as a signature or date. It can also be written from an account with insufficient funds. An eCheck will verify the account information before being accepted.
In fact, the information your customer enters is an important part of eCheck security. This is because how eChecks work is that they’ll often only require a person to log into their bank through a provided payment portal tied to their account. That means there’s no chance to enter inaccurate information. It also means hackers have fewer opportunities to steal your data.
You Can Prevent Payment Breakage
If you have automatically recurring payments, you’ve probably had a customer change their credit card and forget to update their payment information. That means you have to chase down their payment. Who knows how long it will take them to notice the emails alerting them to the error.
Not only that, they might just take the opportunity to rethink your services. It’s hard enough to get them through the sales funnel the first time! Recurring payments made through an EFT or ACH system will only change if someone closes their bank account entirely. That is far less likely than getting updated credit or debit card numbers.
Getting an Account is Easy
It’s very easy to see how eChecks work when you set up an account with a payment processing company. These accounts, also known as electronic merchant accounts, require very little information and time to establish.
You’ll need to provide some basic information, such as your federal tax ID. The account is linked directly to your bank account. This is usually accomplished by securely logging into your account through the service.
Once you submit your application, it takes very little time to approve. Some companies even offer instant approvals, which means you can get started today!
Your Vendors Will Love It
A good payment processing company makes it very easy to accept and send payments. The business or individual who receives the check won’t need an account, and they won’t have to enter sensitive information. Instead, they’ll simply have to enter their bank’s routing and account number. It’s entirely secure.
This means they don’t have to directly share their account numbers or payment information with you to make a payment. Online forms that ask for credit card numbers often store that information on the website servers. That’s just one more opportunity for hackers to gain their sensitive information.
Are You Ready to Get Started?
Business moves as quickly as your ability to make decisions. That’s why you shouldn’t put off modernizing your system of payment. The times are changing, and those who can’t change with them often get left behind. Understanding how eChecks work is essential for you to make the right payment processing decisions for your business.
So, if you’re ready to revitalize the way you send and accept payments, contact us today.
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