To put it simply, an electronic check is a digital version of a paper check. As such, it’s possible to send direct payments from your account to others online. The entire process is rather quick, effortless, and safe. Not only does this save a lot of time for all the parties involved, but it also typically has smaller transaction fees and no transaction amount limits, making the concept of the electronic check rather beneficial for business and regular users alike.
The Difference Between Paper and Electronic Checks
The most obvious difference between paper checks and electronic ones is clearly in the fact that paper checks are made of paper while electronic checks are purely digital. However, paper checks are slowly becoming obsolete. After all, more and more people these days opt to shop online, which is precisely why the need for digital online payments has turned more practical. What’s more, paper checks require longer processing and holding time within the bank while the processing occurs almost instantly with online checks.
The Difference Between Credit Card Payments and Electronic Checks
While the two may appear similar at first, electronic checks actually make use of the ACH (Automated Clearing House), which means that the transaction fee is considerably lower compared to the usual credit card payments. As the interchange fees don’t exist for eChecks, businesses and regular users can both benefit from this type of payment and save some money in the process.
The Difference Between EFT and Wire Transfer and Electronic Checks
Electronic funds transfer (EFT) pretty much covers various forms of money transfers that happen online. So, it’s safe to say that electronic checks are another type of EFT, but not all EFT are electronic checks. On the other hand, wire transfer involves moving a specific amount of money from one bank account to another. Considering that these transfers have to be processed manually, the transaction fees are also higher. What’s more, it’s impossible to pull back a transfer once initiated with a wire transfer, unlike ACH and electronic checks, which makes eChecks a safer alternative of money transfer.
The Processing of an Electronic Check
The merchant initiating the eCheck has to obtain the information of the customer first. Through this info, their banks can communicate and connect, verifying the funds and accepting the payment. The process is simple and hassle-free. This is particularly effective for business purposes, such as brands operating online, through subscription, and businesses that work with large sums of payment money in general.
Are Electronic Check Payments Secure?
When you ask the question of what is an electronic check, the easy answer is a digital form of a paper check. But the whole truth is a lot more detailed than that. This isn’t just a simple online alternative, but also a safer way of transferring your money thanks to the security protocols involved. That said, there are actually six security protocols when working with eChecks. Namely, these protocols are as follows: Authentication, Encryption, Public-key cryptography, Digital signature, Certificate Authorities, and Duplicate Detection.
What’s Necessary for Using Electronic Checks?
Just like different businesses would need a check scanner to accept paper checks, they would need adequate payment software to accept electronic ones. Furthermore, it’s necessary to work with a financial institution that can handle these types of transactions. As the world is becoming increasingly more immersed in online shopping, banks and other financial institutions are gradually getting on board with facilitating the use of eChecks.
What Types of Payment Work with Electronic Checks?
While it’s clear that businesses can benefit a lot from utilizing payments via electronic checks, regular users who need to make simpler payments in comparison can also freely use this tool. As mentioned, electronic checks are especially useful when it comes to recurring payments, which means that the process will come in handy for payments such as rent, mortgage, car payment, gym memberships, student loans, and so on.
How to Send an Electronic Check?
In order to send the electronic check, you obviously need the ACH merchant account. Once you’re all set with your account, there are two different options to choose from for sending the check – online written consent and audio recorded consent. With the first option, it’s necessary to fill out all the information within the form before submitting it. The second option involves calling the client in order to get the correct information directly.
Using eChecks can help businesses expand their revenue potential as well as allow individuals to stay on top of their finances. The entire process is quick and safe, with minimal transaction fees, which is a great deal for everyone involved. As there are no transaction limits either, the entire ordeal instantly gets far less complicated compared to other forms of payments, including other electronic ones.