|November 15th, 2022|
Payment solutions have long been a staple in the world of business. They provide a way for companies to have prompt payment services and receive the funds they need. In recent years, when people think of paper checks as a payment method, they also think of various long-dead items. There has been a flourishing rise in payment solutions that aim to rule the world.
One such payment solution is the E-check solution. According to Nacha, there were 29.1 billion eCheck payments made in 2021. These statistics mean the eCheck payment solution is very much alive and blossoming. eCheck payment solutions use modern technology to process payments electronically. While these facts and statistics may sound futuristic, this payment technology has been running for a decade.
However, it has experienced a bit of revival in recent years due to the rise of mobile services and the popularity of online banking. But even with the popularity of online banking and mobile payments, the eCheck payment solution has unique benefits that can help it rule the world.
So what exactly is an eCheck payment solution, and how does it work? Read on to find out!!
What is an eCheck?
Electronic checks nicknamed as eChecks, provide a method to transfer funds between bank accounts without going through credit card networks. There are several disparities along with the unique advantages of an eCheck from a traditional paper check.
Let us astonish you with some examples of eChecks— tax refunds deposited directly into your bank account and a direct deposit paycheck. Instead of filling out a paper check, you just have to enter your banking information into a website or a payment gateway. eChecks are faster and more secure than traditional paper checks as the eCheck payment solution uses the ACH (Automated Clearing House) network.
How does an eCheck function?
eCheck enables banks to transfer money directly from one account to another. To provide a safe and secure transaction, they use an electronic network called ACH. This network links all the banks in the United States.
The eCheck process takes several steps for tenacious transactions. Let’s understand the process:-
1.Payment Authorization- Firstly, the customer must enter their bank account information and authorize payment. An online payment gateway comes to light during this step. The authorization can be for a single transaction or a recurring subscription.
2.Payment Request- The business payment processor creates a payment request with the information of the customer’s account. The processor sends batches of payment requests to the automated clearing house.
3.Payment Confirmation- After the payment request step is complete, the ACH sorts the batches and forwards them to the customer’s bank. The bank then verifies all the details and confirms the availability of the funds.
4.Payment- Once the transaction is verified, the money gets transferred from the customer’s bank account to the business’s account.
Making the payment is not the only function of eChecks. eChecks can work in reverse. Let’s take an example– if we have directly deposited the payroll or online tax refunds. In this case, the recipient provides their banking information and authorizes a deposit instead of a withdrawal.
These steps are complicated and nerve-wracking, but they’re still faster than processing a paper check. eChecks are way more protected than the traditional paper check, as the banking data is encrypted throughout the entire process.
While going through all the steps and functions, we learned that the eCheck payment solution is a faster and more secure way to make a payment. But the question remains, “ Will eChecks payment solution ever rule the world?”. With some unique benefits of eCheck payment solutions, we can surely come up with an answer.
Benefits of eCheck payment processing
1.More reliable than papers:- While handling paper checks, we always worry about a single thing; i.e. What if it gets lost? eChecks gives a permanent solution to this problem. They can’t get lost or forgotten.
2.More secure than credit cards or paper checks:- According to a report by Federal Reserve, payments made through ACH networks have the lowest rate of fraud value.
3.Cost less than credit cards:- Transaction amounts of eChecks are way less than credit cards. eChecks fees typically fall between 0.5% to 1.5%, while credit cards’ average transaction fee is 1.5% to 3.5%. (That’s a huge difference)
4.Faster than paper checks:- eChecks are typically processed within 3-5 business days. They are usually completed before a paper check arrives in the mail.
eChecks make every transaction faster and more secure. Well, it is not wrong to say that eChecks makes everything easy. With eChecks, you’re not going to think of long-dead things. The low transaction fee and high security make providing more payment processes to your customers easy and affordable.