More than ever, consumers want a wide variety of payment options that best suit their needs. Whether it be credit cards or cryptocurrency, consumers desire as many forms of payment to make their purchases quicker, easier, and safer.
There is no doubt that the recent pandemic ushered the world towards a more “cashless” society. Cash and paper checks are slowly becoming less common. In fact, over 78 percent of Americans took advantage of “digital payment methods” to carry out their financial transactions back in 2020. This new “digital economy” is likely to obliterate any physical forms of payment.
In order to survive and thrive, businesses must be on board and ready to accept these new digital forms of payment. One digital form of payment that you should seriously consider is accepting eChecks.
What Are eChecks?
An eCheck is a “digital version” of a paper check. When an eCheck is used, the funds are withdrawn electronically from the payer’s checking account. It is then transferred via the ACH network. It is ultimately deposited into the checking account of the payee.
All payments are made possible through the Automated Clearing House Network (ACH). The ACH is an electronic network that is used by financial institutions in the U.S. By using an ACH merchant account, a business can easily withdraw payments for their products and services straight from the customer’s bank account. But before the transaction can happen, the customer must authorize it. This is done by either signing a contract, accepting the Terms and Conditions on the website or through a voice recording.
How Do They Work?
When it comes to processing an eCheck, it is quite similar to processing a traditional paper check. The primary difference is that it is a lot faster. Customers do not have to manually fill out a check, then send it to the business for payment. The entire process takes place electronically. With eChecks, you don’t waste paper or your time. Here are the steps that eChecks take to process:
- Seek authorization: Before the merchant moves forward with the transaction, it must seek authorization from the customer. There are a variety of ways in which this can be done such as a signed order form, an online payment form, or a conversation recorded by phone.
- Set-up payment: Once the authorization takes place, the merchant enters the payment information directly into the online payment processing software. If it happens to be a recurring or subscription payment, additional information will include the recurring schedule.
- Submit payment: After all of the information is accurately entered into the payment software, the merchant clicks “Save” or “Submit” to begin the ACH transaction process.
- Funds are deposited: The funds are then withdrawn from the customer’s bank account. Shortly after, the online software sends a receipt of payment to the customer. The payment is then deposited into the merchant’s bank account. After the transaction process begins, it takes three to five business days for the funds to be deposited into the merchant’s bank account.
The Benefits Of Accepting eChecks
If you choose to accept eChecks as another payment method for your business, you will enjoy some amazing benefits. Read on to find out what they are:
- Processing fees are lower
In order to accept online payments, banks and credit card companies charge steep fees. Business owners can be charged as much as 3.5% of the whole transaction value to accept credit card payments online. If they receive a bank wire transfer, they are looking at a $15 charge.
- No holds on payments
Not only do credit card companies charge steep fees to process payments, they also hold back a fraction of your daily earnings in order to protect themselves from “non-payment.” Known as account reserves, they can keep as much as 10 percent of your daily earnings for as much as 180 days to address chargebacks.
On the other hand, “digital check processors” do not obligate merchants to keep an account reserve in order to accept eCheck payments online. When you receive an eCheck as payment, the money is deposited into your bank account, where the funds will be ready to use within one business day. By using eChecks, you don’t have to worry about holds on your income, which liberates more cash to help you invest in your business.
- Secure payments
Credit card companies are struggling immensely to control “online payment fraud”. In 2020, it was estimated that both customers and businesses lost as much as $11 billion to credit card fraud online. A 2020 survey conducted by Ravelin, discovered that mobile payment platforms were also amplifying the frequency of friendly fraud.
eChecks provide a whole new level of security when it comes to accepting payments. In order to reduce the occurrence of identity theft and chargeback fraud, merchants can implement “advanced ownership verification tools” and “signature capture technology”.
How To Accept eCheck Payments
In order to begin taking and processing eCheck payments, you will need to sign up for an eCheck merchant account. It is similar to applying for a credit card merchant account. Once you locate a solid and reputable merchant account provider, be ready to gather and submit the following documentation:
- The number of years you have been in business
- Federal Tax Identification Number (EIN)
- An estimate of processing volumes
- Other information in order to reflect business standing
After all of the above information has been submitted, the provider will come back in a few days with a decision.
Start Accepting eChecks Today
There are many benefits to accepting eChecks as another digital form of payment for your business. With the rapid changes in online retail, customers want more choices in their payment methods. As a quick, eco-friendly, low-cost, and secure form of payment, accepting eChecks simply makes more financial sense.