Electronic check processing is somewhat similar to paper check processing, only faster. Instead of a customer manually filling out a paper check and sending it to the business they need to pay, today’s technology allows the process to happen electronically, saving both time as well as paper waste.
4 main steps to processing an electronic check:
Request Authorization: The business needs to gain authorization from the customer to make the transaction. This can be done via an online payment form, signed order form, or phone conversation.
Payment Set Up: After authorization is complete, the business inputs the payment information into the online payment processing software. If it is a recurring payment, this information also includes the details of the recurring schedule.
Finalize and Submit: Once payment information is properly entered into the software, the business clicks “Save” or “Submit” and starts the ACH transaction process.
Payment Confirmation and Funds Deposited: The payment is automatically withdrawn from the customer’s bank account, the online software sends a payment receipt to the customer, and the payment itself is deposited into the business’s bank account. Funds are typically deposited into the merchant’s bank account three to five business days after the ACH transaction is initiated.
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