|April 6th, 2022|
In this modern age, online transactions have boomed. As a result, all the businesses who want to improve their payment process have accepted them. However, as many companies have changed how they buy and sell goods over the past years, demand for physical checks has continued to decline.
This is why most of the popular online payment methods prefer the use of eChecks.
Here are the frequent questions and answers about eChecks
Have you ever come across these questions that cluttered your mind with a lot of doubts? Even the simple questions, what exactly is an eCheck? How do merchants pay while using them? Are eChecks even safe to use? What type of businesses should incorporate them?
Question 1- What is an eCheck?
Answer 1-eCheck is the digital version of the paper check used to process online payments and use the Automated Clearing House (ACH) network. With the help of an eCheck, the deposited fund gets withdrawn from the payer’s checking account and even gets transferred over the ACH network and deposited into the payee’s checking account.
Question 2- Are you confused about how does an eCheck processing work?
Answer 2- You don’t need to be confused more as the purpose of eCheck processing is to help customers receive the most accepted form of payments. The entire electronic processing system is streamlined into 4 simple steps:
Request Transaction Authorization- The customer who transfers the payment must authorize the amount requested by the recipient to get withdrawn from their account. Moreover, costs can get approved through the signed order form, recorded voice approval, and online payment form.
Set Up The Payment- When the customer approves the payment, the merchant also initiates the payment process by inserting the linked financial data like checking account and routing number into their online payment gateway processing software.
Finalize The Transaction- After receiving the verified financial information from the payment gateway (processor), the merchant saves and submits the payment to their bank. Then, the payment is sent to the ACH network to initiate the eCheck transaction process.
Confirmation of Payment- In the last step, the eCheck transaction amount gets withdrawn from the customer’s checking account and deposited into the business’s bank account. Then, the payment confirmation receipt gets transferred to the customer.
Question 3- Do eCheck services cost processing fees?
Answers 3- While processing any online or in-person transaction, there are always specific fees, and eCheck services are no different. Moreover, these fees are highly essential because they reflect the payment methods that merchants can accept.
As eCheck processing rates depend upon the business, provider, and other variables, they usually have a lower cost than other payments. Moreover, eCheck transactions generally include fixed and flat rates that fluctuate between zero to one percent of the entire amount.
Question 4-What type of payments can be made with eChecks?
Answer 4- The lower processing fees linked with eChecks have made them a known payment method for regular one-time purchases.
eChecks get utilized for a variety of transactions. Some of the most common types of eCheck payment transactions include-
– Subscription-based services and membership plans.
– Mortgage and monthly rental payments
– Automatic and loan repayments
– Legal retainers
– Credit card payments
This is because these transactions are on the verge of becoming the most popular transactions, and there are more than one ways in which your business can take advantage of eChecks. However, even before you begin to explore these options, it has become vital for you to understand the difference between echecks and other payments.
Question 5-How do eChecks, EFT, and ACH payments differ?
Answer 5-As the list of online payments has constantly grown and therefore, it doesn’t remain uncommon to amalgamate different digital payments like eChecks, electronic funds transfers, and ACH payments which frequently confuse people.
Here is a short explanation of each of these different methods which help you to gain a better understanding-
An EFT Payment gets referred to as an ePayment. ePayment gets classified as the electronic transfer of funds from one bank account to another through an online network. The term “EFT Payment” covers a broad number of different transactions. This payment type doesn’t include cash or involvement from other bank employees.
EFT payments consist of transactions such as-
– Wire Transfers
– ATM Withdrawals
– ACH Transfers
– Direct Deposits
– Electronic Benefits Payments
– ACH Payments
The automated clearing house (ACH) network is the batch processing that processes and transfers funds between merchants and banks. At the time of using the ACH network, merchants process payments by adding the customer’s associated bank account information.
The term ACH transfer or payment is also gets referred to as the type of electronic bank-to-bank transaction which gets processed through the ACH network. These types of payments are set up through banks and financial institutions that allow merchants and customers to send and receive payments. The ACH payments are processed as direct deposits or direct payments. Some examples of these payments include paychecks, interest payments, and social payments apps also.
ACH payments get processed with two methods-
ACH Debit Transactions: Money withdrawn from an account to a consumer or merchant account that receives the payment also initiates the transaction.
ACH Credit Transactions: Money that gets directly deposited to the consumer or merchant account that makes the payment initiates the transaction.
Almost all ACH transactions come within the category of EFT payments as they are processed electronically. Although, not all EFT payments get classified as ACH payments until the ACH network processes the payment.
An eCheck is labeled as both ACH debit and EFT payment as it uses electronic funds that get transferred through an Automated Clearing House Network. eChecks are classified as ACH debits because they enable authorized payments to get pulled directly from the checking account for the merchant, consumer, and even organization. These checks are also used for batch processing.
eChecks are called EFT payments because they involve the electronic transfer of funds from one bank account to another through a reputed online network. eCheck payment differs from ACH payment because they get processed through the ACH network.
Question 6-Do you know how paper checks and eChecks differ?
Answer 6-Paper checks and eChecks function similarly, and there are few differences between them-
You need to know that eChecks are derived from paper checks. The most apparent distinction could be seen in their technology.
Here are some reasons suggesting why eChecks are preferred more than paper checks-
eCheck processes get much faster than paper checks as they require fewer steps. Apart from it, eChecks are much safer than paper checks and usually come with many security features like authentication, encryption, and digital signature.
Paper checks are more susceptible to human error and malicious activity. This is why paper checks usually incur more costs than eChecks.
eChecks consist of unlimited data storage capabilities, whereas paper checks demand users to enter information if they want to keep records manually.
Even after the eChecks’ growth in popularity and predictions linked to paper checks turning obsolete shortly, both have remained relevant for industries and markets.
Question 7- Are eChecks secure and safe to use?
eChecks are labeled to be reliable and safe digital payments due to different security measures incorporated by them.
Many eCheck transactions come with different security components, such as-
Digital Signature- Each transaction consists of an encrypted digital signature with timestamps to ensure checks do not get maliciously duplicated.
Encryption- All eCheck transactions are encrypted through some unsecured networks.
Authentication- The payment provider verifies the party submitting the account so that no fraudulent payments get submitted.
Certificate Authorities- Digital certificates get issued by CAs to protect data, encrypt transactions, and enable secure communications.
Public Key Cryptography- It is considered part of the encryption process that ciphers eCheck data to protect it during transit.
The sky is the limit when it comes to the usage of eChecks. Whether related to products or services, a merchant account holder can quickly pay for it through eCheck services.
It is the type of payment that remains the most popular option for higher-cost items, including mortgage payments, monthly rent, car loan repayments, and retainer fees.