Raise your hand if you want to get paid faster. Yes, all hands raise, I presume? A method of payment that you might be overlooking is the eCheck. Here’s everything you wanted to know about eChecks and why you should accept them.
What Is An eCheck?
We are assuming you can guess this—the “e” stands for electronic so it’s basically a paper check with all the same characteristics, but in online form. (You also may see them called online or internet checks.)
And the name is apt because it perfectly embodies the best combined characteristics of a check and epayment. Instead of having a customer manually fill out a check and mail it to you, this process allows it to happen electronically. But it’s just like a check in that it can be used for any transaction that a check otherwise would, and the money will come straight out of the customer’s bank account into yours, providing a seamless avenue for them to pay and you to be paid.
How Does An eCheck Work?
This bank-to-bank transfer happens through the magic of the Automated Cleaning House (ACH), which is the electronic network maintained by the Federal Reserve and used by all the banks in the United States to provide a platform for payment processing companies to move funds between institutions. That means the money goes directly from your customer’s bank account to yours via the ACH network.
- You set up an ACH merchant account with your bank or through services like QuickBooks.
- When it’s time to receive an eCheck, the customer gives you permission, either from signing an online or hard copy payment form, giving a verbal agreement over the phone or accepting the “Terms and Conditions” on your website. (That’s why it’s perfect for things like recurring payments because they only have to do it once.) They’ll give you the bank account number and the routing number of the bank account from which you will receive the funds.
- You enter the information in your online payment processing software.
- Click submit, and the ACH transaction process begins: The funds are withdrawn from the customer’s bank account and deposited into yours about five business days later—almost twice as fast as with regular checks.
- Voila! You’ve been paid!
What Are The Benefits Of eChecks?
Once you get started with eChecks, you’ll quickly realize what a fantastic payment method it is. eChecks can:
1. Offer choice
Most small businesses just want their money—they don’t care how they get paid, but sometimes customers have a particular preference. That’s why offering an eCheck option is smart; it provides one more avenue that a customer can use, along with credit cards, cash or online payments like Apple Pay.
2. Provide transaction ease — for you & the customer
Sick of going to the bank? Yeah, us, too. That’s a huge benefit of eChecks; you don’t have to go to the bank to make a deposit or try to figure out how to take a good, clear picture so you can process it with your phone. There is less tracking and paperwork on your end, and on the customer’s too. They know that the money has left their account, which means they’re less likely to inadvertently become overdrawn as can happen when a paper check languishes on someone’s desk and then one day is cashed without warning. And, you’ll never hear again, “The check is in the mail.”
3. Save money
We all know the burden that credit card processing fees can be. The beauty of eChecks is that they incur very low or no fees. We process your eChecks for free, so encouraging your customers to use eChecks can save on processing fees.
4. Provide swift payment
Typically you’ll find that the funds are verified from your customer within one to two business days and then the funds are in your account within three to five days—roughly twice as fast as with paper checks.
5. Make recurring payments easy
When customers pay with paper checks, you have that monthly hassle of tracking down the funds if they forget. The good news is that with an eCheck, they have authorized you to automatically deduct that money each week or month, or any set time you decide. So, if provide a regular service, like landscaping or pest control, every month you’ll be paid like clockwork.
6. Virtually eliminate fraud
Because eChecks are essentially the same as a paper check, they go through the same verification process as any check, and yet they are not easy to intercept and steal. Thus an eCheck cuts down on fraud and makes them secure for both parties.
7. Offer seamless tracking
Paper trails are important in order to make sure your finances are updated, but they’re even better when they’re not actually “paper.” The eCheck offers the best of both worlds because it makes it easy to automate your financial transactions, making them easier to track.