As a business, you need to be flexible with the payment options that you offer to consumers. This will not only give you the competitive edge over other businesses but it will also help you speed up payment collection.
Aside from credit card payments, you can also use electronic checks or eChecks as a form of payment from customers. Some high risk merchant account holders prefer eChecks because they are safer.
Here, we answer five of your most common questions about eChecks and how they can benefit your business:
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What is an electronic check?
In its essence, an eCheck or an online payment option where you can withdraw money from a customer’s checking account, move it to the ACH network and deposit it to your checking account.
To make this possible, you will need to apply for an ACH merchant account and the customer must authorize the payment by accepting your Terms and Conditions, signing a contract or through a recorded voice conversation.
What is an ACH merchant account?
The ACH network is a platform for funds to be distributed electronically among users. It is regulated and recognized by the National Automated Clearing House Association (NACHA) and the Federal Reserve (Fed), and it’s especially beneficial for businesses because it allows for faster transactions as compared to accepting traditional paper checks.
What are the steps to processing an eCheck?
Processing an electronic check is almost similar to paper check processing, only a lot faster. The first step is to request for authorization from the customer through a signed order form, recorded phone conversation or online payment form.
Once this is completed, you can then input the payment information into the software and submitted for processing of the ACH transaction.
The ACH network then withdraws the amount from the customer’s bank account and the software sends a payment receipt to the customer to confirm the payment.
Then, the network deposits the payment into your bank account, which takes within just three to five business days after the transaction was initiated.
Where are eChecks commonly used?
Electronic checks can be used in almost every type of online transaction, but they’re mostly utilized for big-ticket purchases and recurring payments such as rent, car, mortgage or even fitness gym memberships.
They are most popular in real estate where property managers usually ask tenants to fill out a recurring eCheck rent payment form that authorizes them to deduct the rent automatically from the tenant’s account every month.
What are the Benefits of using eChecks?
Electronic checks offer a lot of benefits both for customers and businesses. For one, they help reduce processing costs by as much as 60% and processing time is also a lot faster than collecting payments through paper checks.
You can also guarantee that transactions are processed safely with minimal errors and fraud because payment processors use heavy encryption and authentication before a payment could get through. Of course, you can save yourself the paper clutter by going for this paper-free option.
Though some industry, such as marijuana dispensaries, cannot use eChecks yet, this form of payment is highly sought after, even in today’s increasingly digital landscape.
So if you’re looking to expand your payment options for customers, an eCheck is definitely a good method to try.
Also Read: The Four Types of Payment Gateway to Choose for Your Online Business