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eCheck Payment Processing
August 29th, 2019

Little Known eCheck Payment Details

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Merchants running small entities are more concerned than their larger counterparts about the inflow and outflow of funds. This post unleashes the important knick-knacks of electronic check payments every business owner must be aware of.

Let the insiders’ insight enlighten you with facts like:

How Electronic Checks Are Different From Paper Checks?

Paper checks are traditional form of online checks. In the digital age, there is so much emphasis on rendering the use of paper for some exclusive tasks only. There is no denying that paper checks have been critical for the majority of payments, especially in the business land but you cannot also undermine the fact that it is a time-consuming process.

A very little number of customers take out their checkbooks to write checks and handover to the cashier, online purchases are more prevalent than ever. Digital payments are not only automatic and fast but they also involve too less of efforts.

Some readers might be pondering inside their heads that why there is such huge difference between processing of paper and digital checks. Well, reasons such as time taken by the business owner to deposit paper check at some bank, longer processing & hold times and digital connection of eChecks together contribute to the efficiency of electronic version of traditional paper checks. In a nutshell, it is right to say that eChecks are making transactions quicker, safer and more convenient.

Why eChecks Are Better Than Credit Card Payments?

We beg to differ from those who think that credit card processing and eCheck processing would work same for them. It is due to the mere fact that their processing does not work similarly in general. So how could you expect it to get changed for your business?

You may have started at your online store with credit card acceptance. It, being the most popular payment type, is preferred over other forms of payment acceptance by most of the merchants. But this is the right time to switch to or add eCheck payment acceptance to your kitty. There are sundry reasons to do this such as, cost savings. As compared to the cost per transaction of credit card, the cost of accepting eChecks is as less as 10 cents per transaction.

Businesses accepting large or recurring payments find it even more beneficial as a considerable amount of savings can be done year after year.

Basics Of ACH Payment Processing

For eCheck processing to work, it is necessary to use the electronic network for U.S. financial transactions, known as Automated Clearing House(ACH). Electronic checks are in a way direct deposit which gets moved from one bank account to another through ACH.

Merchants like you and many more trust the ACH network over other payment methods. When it is capable of moving $43 trillion and 25 billion electronic financial transactions every year, do you think your money is not safe with ACH?

Let us make you familiar with the basic elements of ACH electronic check payment processing:

  • Originator

The merchant who is cashing the check is the originator here. If you are the one who is initiating the payment, you are the originator. For initiating the direct deposit process you would have to provide a secure online form. This form would request the customer’s bank and checking account information. Before you get started with the transaction you need individual customer’s bank routing number and checking account number. With these two number sequences your bank can find the exact bank address and specific bank account from which funds are to be fetched out.

  • Your business bank

Since the request is being originated at your end, your bank will be dubbed as the Originating Depository Financial institution (ODFI). On request, the ACH entry is placed and then sent with other ACH entries in batches to an ACH operator.

  • ACH operator

Role of the ACH operator is to categorize the fund request and send it to your customer’s bank. Either the Federal Reserve or The Clearing House handles this part.

  • Customer’s bank

Customer’s bank facilitates the verification of available funds after Receiving Depository Financial Institution receives the request.

  • Business bank

It takes maximum one or two days to make funds available in your business account.

Is It Possible To Earn Fat Money With eChecks?

Though electronic check payments acceptance helps every business in long run, there are certain kinds of businesses that get specifically benefited by eCheck payment acceptance. These include subscription based businesses, online businesses and businesses that accept huge payment amounts.

Subscription businesses in the fast paced digital age are growing at an enormous speed. These businesses provide recurring payments, autopay and auto-renewals too. It can be anything from selling music to club memberships to magazines, payments on autopilot mode proffer convenience to customers and your business gets thicker income and more business.

Something similar happens with the online fraternity of merchants. Patrons love to buy expensive mobile phones on EMI and companies get extended income for once selling their product. ACH electronic payments are considered safe from the business perspective since checking account numbers rarely change while credit card numbers could be altered easily. With ACH processing you hardly lose your customers, quite unlike credit card processing.

In this scenario of ACH processing, funds are transferred directly between banks. Since there is no involvement of middlemen businesses have fair chances of saving money. The bigger the transaction amount, the more you get.

The Bottom Line

For extending the most convenient way of accepting payments you not only drive income for your business but also keep a check on frauds and chargeback issues. There is no reason for overlooking the progressive payment acceptance method for your business.

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