eCheck Payment Processing: Complete Guide
eCheck Payment Proce
We’re in the 21st century and checks made of paper are slowly disappearing. Paper checks are still issued when you open a bank account, but more and increasing numbers of businesses and individuals are switching towards electronic payment methods.
This is where the echeck comes into play. Echeck payment processing are the latest method to pay for nearly everything.
What is an eChecks?
An eCheck can be described as a payment option that includes the same details as a paper check (i.e. the check account account number, routing number, as well as the payment amount) However, the entire that is handled electronically.
The United States, eChecks run through the Automated Clearing House (ACH) network. ACH payments are handled through NACHA, the National Automated Clearing House Association (NACHA) an non-profit electronic network operating under the umbrella of the Federal Reserve. Other countries, like Canada are also equipped with their own clearing and payment systems.
The term “eCheck” refers to an eCheck transaction is form that is a direct debit. It differs from direct deposit because of which party initiated the transaction. A eCheck is an “pull” payment because the recipient (the vendor) will be the person who initiates the transaction, and thus “pulling” money out of the payee’s (the client’s) account. However, a direct deposit is an “push” payment because the payee is the one who initiates the transaction, and thus “pushing” money from the account of the payer to account of the recipient.
The use of electronic checks is a preferred option for paying for expensive items since they don’t have the same high processing fees that credit card transactions are. They’re also commonly utilized for regular payments such as rent.
If making use of eChecks for periodic payments, customers only need to provide the authorization at the time of authorization (at the beginning when their payment is initially created). This allows eChecks an ideal option for companies that take payments through dues for memberships, subscriptions or other forms of payment.
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How eCheck Payment Processing Works?
The processing of echecks is largely like traditional checks. But, instead of paper, an electronic check uses an electronic file to transfer the data. The steps are as follows…
- The recipient enters their name as the recipient as well as the value (occasionally the merchant may enter the information on behalf of the buyer to an encrypted gateway)
- The client uses digital signatures to verify the authenticity of the transaction. The checks are numbered to allow for the tracing
- Instead of mailing the check in the mail and relying on the mail service it reliably and on time, the file is instantly sent via the internet.
- The funds are transferred directly from the account into the merchant’s bank account.
How Safe are eChecks?
Electronic checks are more secure than counterparts made of paper. Paper checks could be lost in the mail , or intercepted by criminals.
Each transaction made through the ACH network, including electronic checks, is secured and provide a layer of security to both suppliers and buyers. Additionally unlike wire transfers an ACH payment is able to be reversed within a specific period of time (no more than five days following the settlement) which makes the ACH network less vulnerable to fraudulent activities.
Since you must request the approval of the customer before you can initiate the direct debit, it can also provide you with a certain assurance that the details of the transaction weren’t stolen (as is often the scenario with credit card data which can result in costly chargeback charges to merchants).
The numbers on bank accounts also are less frequently changed as credit card number, resulting in less of a chance for the transaction to fail, particularly with regard to regular payments.
Problems with Traditional Check Payments
- Require time and effort to write and deposit
- Carry risk of lost, stolen, or late checks
- Require postage expenses
- Costs for administration and operations to complete the
- Risk of fraud on checks and stop payment costs
Problems with Credit/Debit Card Payments
- It is more expensive to set up as well as operate and maintain.
- Credit/debit card and PayPal have higher rates
- Not the best choice for recurring or subscription payment
- Limited percentage of the market compared to ACH
Features of eCheck Payment Processing
- eChecks can cut down on the cost of paper. With eChecks you can lower the cost of paper, whereas checks made of paper are expensive. So, customers will prefer to transfer money using electronic checks.
- E-Checks are convenient for both merchants and customers. EChecks are suitable for clients and businesses. Customers can make a transfer of funds via their bank account to the merchant’s payment gateway, and merchants can take the payment directly from their customers without any hassle.
- Electronic Checks are more secure when compared to paper checks. they are less risky when compared to checks made of paper. Paper checks travel through multiple hands, increasing the chance of being a victim to fraud. With electronic checks, the information is directly sent to the organization that handles the money.
In addition, checks that are missing crucial information such as date and signature or any other error information can be processed and cleared. However, if there’s something wrong with the electronic check, it won’t start until the issue is resolved.
eCheck Payment Processing with a High Risk Merchant Account
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If you’re a business owner operating in a high-risk sector, the eCheck Payment Processing feature with accounts for high-risk businesses can do well for you. You can keep your transactions secure from any fraud that could come your own. In addition, you can protect your business from chargebacks too.
How Payment Guru Can Help
Payment Guru provides the option of an ACH merchant account, so that you are able to take ACH payments online or at an POS terminal. Our payment program allows merchants to accept more than credit and debit cards, but also allows business owners to accept e-checks. We have the easiest methods to accept payment!