7 Electronic Check Payments FAQs Answered

If you are still using paper checks, now is the right time to switch to electronic checks. eChecks are a digital version of paper checks.  There are several benefits of eChecks. eCheck processing rates are lower than card processing fees. They are inherently more secure and processed much faster than paper checks.

Before you start using eChecks, learn everything there is to know about them. To help you get started, we attempt to answer some Electronic Check Processing FAQs.

#1. What are some Business Benefits of eChecks?

Also known as online checks/internet checks/direct debit, eCheck payment processing services are a digital version of paper checks. Issuing paper checks can be up to  10 times costlier than making electronic payments. eChecks are more secure than paper checks and reduce the potential for errors and fraud.

eChecks benefit the environment and can help reduce greenhouse emissions produced while manufacturing and transporting paper checks. Paper checks get lost, misplaced, or damaged easily. You do not have to worry about losing or damaging your eChecks (as they are intangible).  Also, eChecks cannot be altered, forged, or copied.

#2. What is the Difference Between eChecks, Electronic Funds Transfer, and Wire Transfer?

Electronic funds transfer or EFT is an umbrella term that covers different types of electronic payments such as eChecks, local bank transfers, ACH transfer, PayPal payments, and direct deposits.

Wire transfer/credit transfer/bank transfer is one of the most effective ways to move money fast from one person or entity to another. It is an electronic transfer and can be made through a transfer of cash at a cash office or from one bank account to another.

Unlike ACH transfers, wire transfers cannot be processed in batches and cost more than them. Wire transfers cannot be reversed and are considered less secure than ACH transfers.

#3. How is an eCheck Processed?

eChecks are Processed in four stages

• Authorization: In this stage, the merchant must request the payer to authorize the transaction. Authorization can be provided through an online form or over the phone. Once the payee obtains the payer’s authorization, they transfer the information to the electronic check processing company 
• Processing: The payment processor can initiate the fund’s transfer process by manually entering information into the payment processing software
• Finalization: The electronic check payment processing company verifies the accounting and routing numbers. If the information is accurate, the transaction enters the ACH system.
• Deposit and confirmation: The funds are transferred from the payer’s account to the payee’s account. Both the payer and the payee receive confirmation through email

#4. What are Some eCheck Security Features?

Some security features of eChecks are

• Encryption is mandatory for all eCheck transactions that occur over unsecured networks
• Information in an eCheck is encrypted
• Many certificate authorities issue Digital Certificates such as the CCL Certificate to enable secure communication, protect information and encrypt transactions
• Every check is checked for duplicate transactions and suspicious activity
• Digital signature with timestamps is used to ensure that eCheck transactions cannot be fraudulently replicated

#5. What Do Businesses Need to Accept eChecks?

If you want to use eChecks, you must collaborate with a financial institution, a payment processor, or a payment gateway. The type of hardware and software needed will depend on the way eChecks will be accepted.

If, for instance, you want to accept eChecks at the point of sale, you will need a check scanner. If you want to accept eChecks online, invest in software that can accept this payment type.

#6. What is the Difference Between eChecks and Credit Card Payments?

The fundamental difference between eChecks and credit cards is that eChecks use ACH to transfer funds, whereas credit card transactions are conducted over credit card networks. Echeck processing fees (can be as low as 10 cents per transaction) are typically lower than credit card processing fees.

#7. How can Adding eCheck Acceptance Grow Revenue?

Here are some ways adding eCheck acceptance grows revenue

• The median internal cost for sending and receiving eChecks is much lower than paper checks. With eChecks, you will also eliminate some costs associated with issuing paper checks
• For billers and retailers, eChecks improve cash flow and reduce day outstanding
• eChecks are excellent for recurring billing models. Recurring billing prevents missed or delayed payments
• eChecks are much more convenient than paper checks and encourage repeat business

Premium Payments is committed to helping businesses reduce payment processing fees. Our payment solutions are designed to help businesses accept payments directly from customers. To discuss your requirements, call 954-934-9004, 305-747-5855 or email us at info@premiumpymts.com