Paper checks add extra manual processes to your financial management, creating time wasted on tedious tasks. Luckily, eChecks are an option you can implement that offers more convenience than paper checks.
EChecks are a type of electronic funds transfer, meaning eChecks transfer funds between two bank accounts via the internet.
Want to learn more about how eChecks works and their benefits? Keep reading to find out.
Key takeaways
Essentially, eChecks are a digital version of paper checks. Electronic check payments, or eChecks, are electronic checks sent over the internet.
As more and more purchases are made online, you can implement eChecks as another payment option for receiving online payments. Compared to paper checks, eChecks take less effort to deposit and have shorter processing times — typically around 2–5 days.
For online payments, eChecks work a bit differently than card processing.
Unlike credit and debit cards, eCheck payments use ACH to transfer funds instead of card networks. This helps eChecks have lower fees per transaction.
Automated Clearing House (ACH) and eChecks are similar in the way they transfer funds from one bank account to another. In fact, eCheck payments use the old established ACH network.
The main differences between ACH payments and eChecks are:
Type of payment:
Storing of payment information
Processing fees
Time to process payments
Use of checks:
Account withdrawal
Deposit limits
Physical size
ECheck payments work by digitally transferring funds from one bank account to another. EChecks are an electronic payment, so they are part of electronic funds transfer (EFTs).
The payer starts the process by entering their bank routing number and account number into the payment processor.
Once authorized payment travels via the ACH network and funds move to the payee's account.
Ensure your chosen payment provider is reputable and encrypts your customer data.
Implement a payment processor that accepts ACH. For the security of your customers, only use reputable providers that encrypt customer data.
Set up an ACH merchant account through your payment provider.
Get authorization from the customer via a digital signature or recorded phone call.
Gather customer information. Customers will submit their banking information: checking account number and banking routing number.
ECheck payment processing occurs with the support of your ACH provider. Customer account details will be verified.
EChecks are faster than paper checks when sending and to receiving payments. Paper checks can take one or more weeks to clear whereas an eCheck takes two to three days business to clear.
EChecks save you time by replacing the manual processes required for paper checks like: Ordering checks, preparing checks for mailing, enveloping, and posting the check.
EChecks are more reliable than paper checks: you don't need to worry about mailing delays or stolen mail, or envelopes getting lost.
EChecks are safer to send, they can't be intercepted through the mail and decreases your risk of check fraud. Instead of relying on the mail, eChecks are sent from the customer's account to the merchant's bank account digitally.
EChecks are cost effective, you don't need to purchase paper checks, stamps, or envelopes. EChecks still have a processing fee, but only cost about the same amount as a stamp.
EChecks don't use paper or mailing transport, so in the long run it's better for the environment.
With paper checks you can't go chasing down the envelope to cancel it. With eChecks, if you make a wrong payment, you can at least check with your payment provider to see how long you have to dispute the eCheck.
Overall, eChecks are more convenient. You rid your process of manual labor and simply your paying or receiving payment process.
Compared to credit card payments and debit, eChecks are processed slower. Added logistics to complete payment add time delays compared to other digital payments.
EChecks might be unfamiliar to some customers, so could be challenging to expand into eChecks. Once customers are familiar, however, both you and your customers can take advantage of the benefits of eChecks.
EChecks process faster than paper ones, meaning a customer’s bank account might be unprepared to pull funds. When this happens the eCheck will bounce.
Compared to other payment methods, you need to gather more information from the customer to do check payments. This can take more labor on both your end, and for your customer.
Dealing with bounced checks can be stressful. Here are some steps you can take to handle this situation:
The payment processor you select for your business will impact your financial management, so it's vital to choose thoughtfully.
Consider the following key considerations when choosing a setup:
Security: Your payment setup needs to be secure. It should have security measures for customer data like encryption and fraud prevention.
Reliability: Chaos ensues if your payment processor stops working. Ensure you choose a payment setup that is reliable and will be consistent with your business needs.
Fair cost: High fees can add up over time, leading to less money available for your financial needs. Consider if the platform is subscription-based or on a per-use basis and the pros and cons of each model. Make sure to choose a payment provider that has fair pricing so you're able to receive its full benefits while not jeopardizing your own financial well-being.
Integration: A payment provider that integrates with your existing accounting software will save you time when it comes to tracking payments and reconciling. Consider how software integrations could create additional benefits for your financial management.
Range of payment methods: Choose a payment processor that fits the payment acceptance needs of your business. If you are looking for eCheck processing, choose a platform that allows eCheck acceptance.
Plooto offers a variety of online payment methods suited for your business, including ACH, EFT, and credit cards. For checks, Plooto gives you two options: paying with eChecks, or fill in your check details online and let Plooto handle the printing and shipping of your paper checks.
How long does it take for an eCheck to clear?
An eCheck can take 2-3 business days to clear.
Can I use eChecks for recurring payments?
Yes, you can set up recurring payments with eChecks, but they’re usually used for one-time payments.
Do eChecks process on the weekends?
EChecks only process on weekdays. This is because eChecks use the ACH network to process, and the ACH does not operate on weekends.
How to cancel an eCheck?
If you are the sender of an eCheck, you will need to contact your bank to cancel the eCheck. Be aware that if the eCheck has cleared, it can't be canceled, but you can request a refund.
How much does it cost to process an eCheck?
A transaction fee for an eCheck can range between $0.30 to $1.50, depending on your payment provider.
How can I get an eCheck merchant account for my business?
To set up an ACH merchant account, first pick a provider then gather the following information: federal tax ID, years in business, and an estimated processing volume.