eCheck Payment Processing: Time, Safety & Acceptance

How do electronic checks (eChecks) work? How long does it take for an electronic check to be processed? Well, all these questions have been answered in the article below.

I will go further into assessing the procedure, safety, and risks of using e-check payment processing. You will also get a glimpse into the pros and cons of electronic checks.

What is an eCheck and How Does it Work?

This section focuses on the meaning and application of e-checks (electronic checks).

What is an eCheck?

An e-check (electronic check) is a type of payment that electronically transfers funds from the customer’s bank account to the vendor’s bank account. An electronic check is also known as an electronic transfer or direct deposit.

This, therefore, means that with an eCheck, you can make payments using the internet.

Further, with an eCheck, you can send money to anybody across the globe, and the recipient should receive the cash within 4-6 working days. Nevertheless, when you do an Instant Transfer, the person receiving the money gets it immediately.electronic check processing

In essence, if you are a service provider or merchant, it means with an eCheck funds are electronically transferred into your bank account from a client or customer’s bank account directly into your bank via the ACH system.

What does an eCheck look like?

An electronic check is simply an electronic deposit in which both the recipient and sender get a notification message in addition to the entry indicated on the bank statement.

How electronic checks work

So, how do e-checks work? Well, Electronic checks are like traditional paper checks, but they can be digitally signed, transmitted, and processed transactions electronically instead of on paper.

Electronic checking service providers usually send an “electronic approval” message to their client-bankers at some predetermined time during which it is still possible for them to cancel the transmission of funds.

If this codified cancellation does not happen within this time frame, then by default, the transaction clears automatically without any manual intervention needed by their respective banks or vendors whatsoever.

How to send an Electronic Check

What do I need for an e-check? Well, to send an electronic check, you’ll need the following information:

  • The exact dollar amount of the check that you’re sending.
  • Stub number for deposited checks (also called “transit number”) from the upper right corner of your paper checks.
  • The bank account and routing numbers for both your and the merchant’s account.
  • An email address so the merchant can process it as quick as possible and send a copy of your check back to you at this address within 2 business days

How to convert a paper check to an e-check

Apparently, you may think of checks as official papers for payment. But, even if you write your check-in a paper by hand, the check can be converted to an eCheck.

Converting the paper check to an electronic check can only be done at the cash register.

One of the primary benefits of having an eCheck is that it results in the funds leaving your account faster than when using paper checks.

Converting the paper check to an eCheck can be accomplished using the check-reading machines.

Typically, the bottom of your paper check consists of unique numbers, which have been printed in particular fonts using magnetic ink.

These numbers make it easier for special devices to get the specific information needed to convert the paper check to an electronic check.

Of great importance is that you are always advised to make use of recognized and registered financial institutions when you want to convert your paper check to an eCheck.

Electronic Check Security & Safety

Safety is a key feature worth all consideration in today’s world. With increased cases of cyberfraud, it is only reasonable that payment systems are designed to prevent possible security breaches.

Are eChecks Safe?

Are checks safe for use online? Electronic checks are very safe, in fact, safer than writing a paper check. Paper checks can be forged after they’ve been written with little to no warning, but an electronic check is almost impossible to forge without the bank’s advanced knowledge of someone’s funds.

In particular, the eChecks can be reversed under three conditions, which make it a safer form of payment.

  • First, you can receive a refund if you never authorized a payment or a purchase if you were buying something.
  • Second, you will receive a refund if your eCheck was processed on an earlier date than the one indicated or authorized.
  • Third, your check will be reversed if the amount of payment is different from the one that was authorized.

Also, the eChecks are safe because they are processed and handled by an automated machine. This means there are fewer or no errors that could result in the loss of funds from your account.

eCheck Payment Processing & Clearing Time

How are eChecks processed?

eChecks processing starts when your client writes a paper check when purchasing goods or services from you.

As a service giver or merchant you run the check through an imager or reader, which captures the needed information including the account number, check number, and the bank’s routing number, and your related information to successfully accomplish the one-time e-payment.

Afterward, a receipt is produced and printed for the client to sign, the check is annulled and returned to the customer. The business deal will appear on the customer’s bank report as a debit.

Finally, you are then required to upload the captured check information for processing, and the funds are loaded into your account within a maximum of two days.

Are eChecks processed immediately?

The eChecks processing time basically highly variable from one provider to another. On average, for most providers, the eChecks are processed within a maximum of two business days.

This, therefore, means that eChecks are never processed immediately as some people might be thinking.

High-risk eCheck Processing

High-risk eCheck processing can either be operated through the ACH (Automated Clearing House) network or through the eCheck hi-tech grounded on check 21 bank-to-bank data transmission.

Usually, the high-risk eCheck processing approach used is primarily established using the requirements of the type of business involved.

As opposed to card payments, the high-risk eCheck processing providers a lower electronic check processing, irrespective of the type of technology employed.

Electronic Check Clearing Time

How long does it take for an electronic check to clear at the bank? The length of time it takes for an electronic check to clear varies depending on the issuing bank, the company accepting the deposit, and whether or not funds are available in the account at that given moment. The general rule is 1 to 2 business days.

It’s important to verify with your bank before trusting this information. Always make sure there are enough funds in your account before depositing a check into your checking or savings account!

How to Pay with eChecks

An eCheck works in the same manner as the paper check but the difference is that all the eCheck processing happens online.

However, offline brick-and-mortar businesses can make use of the same approach to convert an instant paper check into an electronic check.

If you are a merchant or service giver, you can set up an offline payment option to allow your clients to pay with an eCheck.

All you need to do is click on the offline payment methods and click the offline eCheck payment method on your store set up payments.

Online, means you are connected to the internet. In this approach, you use the ACH system to allow clients to make payments using the eChecks.

eCheck Payment Processing with Paypal

If you wish to send someone money into their Paypal using eChecks, then you will be happy to learn that the process is the same as any other eCheck.

Once you send the money to them, it will be loaded into the PayPal accounts. They would then receive the checks 48 to 72 hours later.

Stores that Accept eChecks

There are numerous stores that accept eChecks as one of their payment methods. The following are some of the stores.

  1. Aeropostale: The type of online check applied or accepted is a PayPal check connected to a checking account.
  2. H&M: The kind of online check accepted is the invoice or PayPal linked to a checking account. An individual is expected to pay within 20 days if he or she uses an invoice.
  3. QVC: The online check approach accepted is the paper check sent through email. The check must be received within ten days of placing the order otherwise the order will be annulled.
  4. Target: The online check accepted is the PayPal connected to the checking account.
  5. Walmart: The online check approach accepted is PayPal linked to the checking account.

Electronic Check Advantages and Disadvantages

There are many pros and cons of using electronic checks compared to traditional paper checks.

Advantages of Electronic Checks

The benefits of using e-checks over paper ones are many. Some of the notable advantages of electronic checks are:

1. Lower transaction fees

Businesses that use e-checks save money on check processing costs, allowing them to invest more in core operations.

2. Reduced hands-on labor

E-checks also demand less manual work from employees and managers, allowing businesses to decrease total labor costs or focus on customer service, inventory management, and other essential tasks.

3. Faster Processing time

Quicker processing times benefit company owners. Traditional checks take many days to clear from the customer’s account to the merchant’s. E-checks, on the other hand, are processed in half the time, allowing businesses to get paid faster. This helps firms to handle their payments more simply and promotes a more solid financial condition.

4. Increased safety

Electronic checks are less convenient for fraudsters because they need access to your checking account information and routing number in order to cash them out which means there has been access granted by the holder.

5. Effective payment option for merchants

Some clients do not have debit or credit cards. This limits purchasing options, especially for online vendors. Merchants that accept e-checks provide you access to services you wouldn’t otherwise have.

Disadvantages of Electronic Checks

Using e-checks for payment processing is not devoid of disadvantages or demerits. Some of the disadvantages people may face while using electronic checks include:

1. Prone to transaction errors

Electronic checks are computer-driven and hence susceptible to computer processing glitches such as duplicate or erroneous withdrawals.

2. Prone to limited float

Electronic checks also limit the amount of “float” in the duration between when the check is written and when it is cashed by the merchant thereby putting you at risk of over-withdrawal.

3. Susceptible to cyberfraud if handled carelessly

E-checks involve computers that can give hackers access to your banking data. Some scammers use e-checks to gain your financial information, making it look like a real transaction to convince you. Unknown firms are a risk, while legitimate businesses usually reveal their e-check processing methods.

References on eCheck Payment Processing

  • 1: Electronic Checks – TheBalance
  • 2: Differences between e-checks and paper checks – Chron Small Business

READ MORE: How to upload a check to a prepaid card fast.

About Nelkwob

Nelson K. is a former banker with experience in providing financial solutions to a variety of customers (individual and commercial). His background makes him the best go-to individual for information on money services offered by banks, credit unions, gas stations, and stores.

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