What is eCheck Processing?

Essentially, an eCheck, or electronic check, is a form of online payment where money is electronically withdrawn from the payer’s checking account, transferred over the ACH network, and deposited into the payee’s checking account. With an ACH merchant account, a business can withdraw payments for a good or service directly from their customer’s bank account. The payment must be authorized by the customer, either by signed contract, acceptance of a website’s “Terms and Conditions”, or a recorded voice conversation.

eChecks Are Safer Than Paper Checks

According to the most recent AFP Payments Fraud and Control Survey, 74 percent of participating organizations experienced check fraud in 2017. But less than half were the targets of electronic fund transfer (EFT) fraud.

Paper checks pass through more hands than eChecks (literally and figuratively), which creates more opportunities for fraud and/or interception by criminals. But with eChecks, the information is transmitted directly to the financial institution.

Processing eChecks has allowed us to take in more payments and increase our return on investment for specific customers.

Additionally, a paper check can be missing important details such as the date or signature or have incorrect information and still be processed and cleared. But if something is wrong with an eCheck, the transaction won’t be initiated until the issue is resolved.

Accepting eChecks, also referred to as Remotely Created Checks (RCC), can make all the difference in a high chargeback industry

How Does Electronic Check Processing Work?

4 main steps to processing an electronic check:

  • Request Authorization: The business needs to gain authorization from the customer to make the transaction. This can be done via an online payment form, signed order form, or phone conversation.
  • Payment Set Up: After authorization is complete, the business inputs the payment information into the online payment processing software. If it is a recurring payment, this information also includes the details of the recurring schedule.
  • Finalize and Submit: Once payment information is properly entered into the software, the business clicks “Save” or “Submit” and starts the ACH transaction process.
  • Payment Confirmation and Funds Deposited: The payment is automatically withdrawn from the customer’s bank account, the online software sends a payment receipt to the customer, and the payment itself is deposited into the business’s bank account. Funds are typically deposited into the merchant’s bank account three to five business days after the ACH transaction is initiated.