Global E-checks - Blog

What is an eCheck really?

September 12, 2018

In reality, the eCheck, short for an electronic check, is basically a financial instrument that that is used for transferring money from account to account. It is a relatively newer type of online payment where the money gets withdrawn from the account of the benefactor via an electronic medium. The entire procedure is simple and revolves around the ACH or an automated clearing house network. The end destination is always the same, that is, the bank account of the beneficiary. The idea is that along with an ACH network, a business house can withdraw the respective sum of money from the designated bank account for the concerned good or service. The authorization of the payment must be done by benefactor either by way of a signed or written contract, by way of accepting the website’s “terms and conditions”, or by way of a recorded conversation.

So How Does eCheck Processing Really Work?
The electronic check or the eCheck is the new deal in the market. eChecks have a lot of benefits and have become immensely popular among users for the same reason. The major benefit being the efficiency that is achieved through time management. Time is money in today’s world and whoever masters time is the real winner. With the help of eChecks, users spend no time in making a transfer. And not only this, but there are no humongous amounts of fees involved as in the case of credit cards. When it comes to processing, eCheck processing is very similar to that of traditional paper check processing. The only difference is that the entire process is undertaken online and that it is way faster. In place of a customer manually putting down information in traditional paper checks and sending them to the beneficiary they need to pay, the technology available enables the process to happen on an electronic medium, thus, saving both papers as well as time.

There are basically four main parts to processing an eCheck. They are as follows –

  • Request For Authorization: The beneficiary or business house needs to get the required authorization from the benefactor or the customer to make the transaction happen. This can be concluded through an online payment form generated online and sent via email, a specific signed order form, or last but not the least, a phone conversation (preferably recorded.)
  • Set Up For Payment: After the authorization gaining is done with, the business or the beneficiary firm put down the payment details in the processing software for online processing. In the case that it is a recurring payment, this information also includes the information regarding the schedule of the recurring payment.
  • Finalizing and Submitting: Once the payment details are properly entered into the payment processing software, the beneficiary or the business opts for “Save” and/or “Submit” and begins the processes involved in an ACH transaction.
  • Payment Confirmation and the Deposition of Funds: The payment is automatically taken out from the benefactor’s bank account. The online payment processing software eventually sends a receipt for payment to the benefactor or customer, and the payment then is transferred to the business’s or the beneficiary’s designated bank account. The funds are essentially transferred to the beneficiary’s or the merchant’s bank account within 2 to 5 business days after the ACH transaction has begun.

Hope that information helped.

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