by An electronic check, or e-check, is a form of payment made via the Internet, or another data network, designed to perform the same function as a conventional paper check. Since the check is in an electronic format, it can be processed in fewer steps.
Additionally, it has more security features than standard paper checks including authentication, public key cryptography, digital signatures, and encryption, among others.
Advantages
Electronic checks, also known as e-checks provide convenient and simple ways for your customers to make payments online, and your company to reap the benefits. E-checks implement a way for customers to electronically process their transactions online without forcing them to pay with a debit or credit card. So what are the advantages against other forms of payment?
Save Money: E-checks are a more efficient way for your business to save money. Companies that process e-checks electronically instead of processing paper checks significantly reduce their costs when it comes to converting these transactions.
Instant: Paper check processing involves more work, and takes more time. When using paper checks, your business has to process their data in bundles, whether that’s daily, weekly or monthly, whereas electronic checks allow for instant processing.
Global Acceptance: E-checks open new avenues for companies, letting them engage in different markets without limiting their business opportunities. Because of easy online accessibility, any global bank or type of currency can be accepted with e-checks.
Security: Electronic checks use the same system as direct payments and deposits, which relay the same security and comfort factors that all customers want, maintaining the satisfaction component.
Less Error: E-checks reduce the amount of errors because customers are authorized to input their specifics into the system, thus eliminating inaccuracy.
Electronic Checking Benefits:
Payhub Payments’ electronic checking process is fast, reliable, efficient and secure for all your transactions. We save you time and effort by using our system because we convert paper checks into electronic at the point-of-sale and automatically deposit the funds into your banking account. Let us reduce your paperwork and runs to the bank, we’re here to help.
How an Electronic Check Works
An electronic check is part of the larger electronic banking field and part of a subset of transactions referred to as electronic fund transfers (EFTs). This includes not only electronic checks but also other computerized banking functions such as ATM withdrawals and deposits, debit card transactions and remote check depositing features. The transactions require the use of various computer and networking technologies to gain access to the relevant account data to perform the requested actions.
Electronic checks were developed in response to the transactions that arose in the world of electronic commerce. Electronic checks can be used to make a payment for any transaction that a paper check can cover, and are governed by the same laws that apply to paper checks. This was the first form of Internet-based payment used by the U.S. Treasury for making large online payments.
The Benefits of Electronic Checks
Generally, the costs associated with issuing an electronic check are notably lower than those associated with paper checks. Not only is there no requirement for a physical paper check, which costs money to produce, but also electronic checks do not require physical postage in cases of payments being made to entities outside the direct reach of the entity issuing the funds.
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.
