The Basics of E-Check Processing and Payments: Decoding Electronic Checks

What is an E-Check?

An electronic check, also known as an electronic check, is a digital variant of a paper check. With an electronic check, funds are electronically removed from the payer’s checking account, transferred to the ACH network, and then deposited into the checking account of the person who is paying.

The payment process is facilitated via this “Automated Clearing House” (or ACH) network, an electronic network used in U.S. financial institutions. If you use an ACH merchant account, businesses can take payments for products and services from their customer’s bank accounts. The customer must approve the transaction via a written contract or acceptance of a website’s “Terms and Conditions” or by recording a voice message.

Electronic checks (e-checks) offer an efficient and streamlined method for transferring funds, using the Automated Clearing House network as part of this process. But while e-check processing and check printing coexist seamlessly for complete financial management; providing both convenience and familiarity in one package.

How Do eChecks Work?

Processing electronic checks is like the paper check process but quicker. Instead of the customer manually writing a check on paper and delivering it to the company, they must pay; this process can now be done electronically, saving time and paper waste.

There are a couple of steps in the process of processing an electronic check:

Authorization: The company requires the customer’s approval before making the payment. This can be accomplished through internet-based payment forms, a request form, or recorded telephone conversations.

Payment setup: After authorization, The business enters the payment details into the electronic payment processor. If it’s a recurring payment, the information includes the specifics of the schedule for recurring payments.

Finish and send: After data is correctly entered into the payment program, The business presses “Save” or “Submit” to initiate the ACH process.

Deposit funds: The money is automatically deducted from the customer’s bank account, and the online program issues a payment receipt to the customer, and then the money is deposited in the business’s bank account. The funds are usually deposited into the merchant’s bank account between three and five days after the payment has been made.

Are ACH or EFT mean the same thing as eCheck?

EFT signifies “Electronic Funds Transfer.” This broad term covers a variety of kinds of financial transfers, which include:

Wire transfers

Direct deposits

Electronic benefit payments

ACH payments

ACH signifies “Automated Clearing House.” This is the digital network utilized by banks within the United States that provides infrastructure for payment processing firms. Learn more about ACH here.

The most effective way to explain the similarities and differences between ACH, EFT, and the eCheck is to say that E-Check is a kind of electronic fund transfer (EFT) that utilizes the Automated Clearing House (ACH) network to process the transaction.

What kind of payment can You Make using eChecks?

Because merchants pay a lower cost to accept eCheck payments as opposed to processing credit card transactions, It is commonplace to accept eCheck payments for items that are expensive, like mortgage, rent, or car payments, as well as monthly costs that are expensive, like legal retainers or fitness memberships.

Can I Use eChecks for Recurring Payments?

eChecks are one of the most well-known types of recurring payments. You might also have encountered the term “recurring ACH payment” or “direct debit, “similar to a regular e-check payment.

For instance, property managers frequently require tenants to complete the recurring eCheck Rent payment application. This allows them to deduct rent automatically from the tenant’s account when they check at a particular time each month.

Approximately how long does it take for an eCheck to clear?

The eCheck clearing process is different among providers, and the eCheck processing times vary. Funds are generally checked within 24 to 48 hours after the transaction date. If the payee has funds in their checking account, the transaction usually clears within 3 to 5 business days, and the funds are transferred into the payer’s account.

How Do I Send an eCheck Payment?

To send an electronic transaction, ensure that the company or individual to whom you’re transferring money is a member of the ACH merchant account. This account enables them to access the ACH network to accept electronic money transfers.

After that, this is how to pay for it using the eCheck:

The payment provider will send you a payment form. You must enter your bank account number, routing number, and payment amount. When you click “Submit,” you authorize the recipient to take your payment amount from your account.

You could also create eCheck payment accounts by phone if you need a different method. The payer will require your routing numbers via a recorded call. They enter these numbers and the amount to be paid in an electronic payment processor. When they click “Process,” the payment is taken out of the payer’s account and transferred to the payee’s account.

What if an eCheck Bounces?

Contrary to paper checks, those who pay by eCheck typically know when their money will clear their account within three to five business days. The funds are usually checked in your account within 24 to 48 hours after payment. Your check will “bounce” like a typical check if you don’t have enough funds.

The authorization request you signed with an online form for payment or a phone call is your commitment to make the payment. Contact the company you paid to find out if there were any charges for the bounced check or any penalty due to late payment, and then set an alternate payment method as quickly as possible.

How do I cancel an e-Check?

If you’re a business proprietor, you might be confronted with the decision to cancel an eCheck that you’ve issued to customers. The procedure for doing it will be contingent on the payment method you’re using and the phase for the purchase.

If the transaction has been cleared in the account of your choice, then you cannot change the electronic check, and you’ll need to arrange an account to receive a refund. If the transaction is waiting to be processed, you should contact your processor for the best method to get it done.