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March 1st, 2019

Things Every Merchant Should Know About Electronic Check

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Electronic check (famously known as E-check) is the preferred payment method in modern market. In simple words, it can be defined as digital version of the old paper check. But that is not all about it. If you are a business willing to accept payments from customers through electronic checks, you may have several questions pertaining to it. Don’t worry as we have covered every important query you may have in your head.

What Is An E-Check?

Keen to know how different the electronic representation of physical check is from the paper based check? Learn some salient features of E-checks given in the points below:

  • Electronic checks contain the same information as the old form of check.
  • The same rich legal framework is followed for electronic checks as well.
  • These can be exchanged between involved parties directly.
  • Electronic checks can completely replace paper checks in any of the face-to-face or remote transactions.
  • They are considered more useful than their paper counterparts as value-added information is also provided.

Advantages Of Accepting E-checks

Every progressive company would want to have a payment system that is more efficient and cost effective than now. Before we dwell into the working of E-check, we think it is a great idea to have the understanding of best benefits rendered by it.

E-check enjoys upper hand over paper equivalents because:

  • Quicker Payment- Unlike paper check processing, it does not require you to fill in the check manually and send it to the recipient via e-mail.t saves both your time and paper.
  • Lower Cost- It is the most alluring benefit of using E-checks. They are cheaper than many other online payment methods. They are best for making and receiving payments of large denominations. E-checks prove more cost effective than card payments because processing fees is associated with them. Their fees typically range between 25 cents and $1.50.
  • Secure Payment Method- Accepting electronic checks payment is tempting because they are highly secure method. Unlike paper checks, they are devoid of chances of being tampered. E-checks go through security of the ACH network; hence, possibility of getting across a fake check is minimal.
  • Bounce Checks Are Rare- Electronic check services practice confirming for sufficient account balance beforehand. Since prior confirmation is made, chances of check getting bounced are trivial. For this reason, they attract businesses as they facilitate consistent payments.
  • Automated Payments- It is another very much appreciated feature of these checks. Payment process can be automated for making monthly payments in case of paying rent or insurance payments. E-checks can be automated to be sent every month on the same date. Enjoy your peace of mind as you need not remember the date for filling a check.

How E-checks Work?

Electronic check processing works quite similar to the paper check processing. The only and much appreciated difference is that the former one is much faster than the other.

Steps behind every single E-check payment include:

1.Request Authorization

Any business that wants to accept E-check payment has to seek authorization from the customer in order to make the transaction. Authorization can be gained via an online payment form, signed order form, or over phone.

2.Payment Set Up

Once authorization is gained, the business fills in the payment information into the online payment software. At this very stage, details of recurring schedule are provided, if it is a recurring payment.

3.Final Submission

Either business or payment processor submits the payment information over ACH network after proper input of payment information.

4.Funds Deposition

Amount of payment is automatically withdrawn from customer’s bank account and payment receipt is sent to the customer immediately after that. Within 3-5 business days of initiating ACH transaction funds are typically deposited in the receiver’s bank account. Payer’s bank takes 24-48 hours to clear the payment but undertaking security measures stretches out the payment cycle longer.

How To Get An E-check Merchant Account?

Now that you know the benefits of using electronic checks in your business, you should quickly grasp how to sign up for them or ACH merchant account.

The process of signing up for an E-check merchant account is quite similar to that of getting credit card merchant account. Once a business finds the most suitable merchant account service provider, they need to share the details for:

  • Federal Tax ID
  • Number of years of experience
  • Estimated processing volumes

Once your payment processor or merchant account provider enters the requisite details, approval takes place in a couple of days.

Is There Any Difference Between ACH And EFT? How Closely They Are Related To E-checks?

Assuming that you already understand what E-check is, we are jumping to the other two terms, of course one by one.

EFT- It stands for electronic fund transfer. It includes other types of financial transfers like wire transfers, direct deposits, electronic benefits payments, ACH disbursements, etc.

ACH- It is the abbreviation of “automated clearing house.” Financial institutions in the country use this electronic network for accessing infrastructure used by payment processing companies.
Relationship between three terms in question can be best explained as:
E-check is a kind of electronic fund transfer which needs automated clearing house network to process the payment.


Electronic checks are fast, easy-to-understand, efficient, cost effective and secure method of accepting payments from your customers. They are set to lead the way to an electronic commerce environment with aforementioned attributes.

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