With electronic payments being the norm and cash payments & traditional checks becoming less common year after year, it can be tough keeping up with all the various forms of payments available to your business.
But, as a business owner it’s important to understand the pros and cons of each payment type you can and do offer to your customers, and the more sales you transact the more important the charges and flexibility of these payment options become. Rapid growth requires a proper foundation across every facet of your business, and payment processing is a big part of that. Transaction fees really add up, so even a small percent change can mean big savings for your business in the long-run.
And it’s not just about keeping an eye on transaction fees, providing the best option for your customers increases customer satisfaction and online conversion rates.
With this in mind, let’s take a look at one form of electronic payment, the eCheck.
eChecks, or electronic checks, are precisely what they sound like: “an electronic payment withdrawn from a customer’s checking account and transferred over the ACH network to the participating merchant’s account.”
eChecks function and perform almost exactly like traditional checks, but you don’t have to run to the bank or worry about employees misplacing or destroying them.
So what’s the big deal?
In general, electronic checks are more secure, cheaper, and more convenient than physical checks. Accepting them online is a fairly simple process, and they can really help grow your business when utilized correctly, although the requirements are slightly different than taking credit card or debit card transactions through an online gateway:
Unlike credit card payments, eChecks require a routing number and checking account number and either a signed contract, acceptance of a Terms & Conditions contract, and/or a recorded voice memo.
This is how eChecks typically work:
It sounds a little convoluted, but remember that software handles pretty much all of this.
And the beauty of eChecks is, once a customer is set up, it’s super easy to conduct another payment through it. This makes it useful for businesses who have lots of repeat customers. It’s more convenient and cheaper for both parties, which brings us to why else you should support eChecks.
While eChecks are generally a good idea to support regardless of the type of business you run, there are some cons to make note of:
All you need to support eChecks is to make sure the merchant services provider or merchant account you use has an ACH merchant account. Almost all major payment processing solutions providers have the ability to accept payments over the ACH network, and they should have a system built in to accept eChecks.
Don’t have a merchant services provider? Learn more about Tidal’s payment processing.
As we mentioned earlier, transaction fees are almost always lower for eChecks, but these can vary depending on your provider. Make sure you do your due diligence and see what your current or potential merchant service providers charge for each transaction type.
Not quite. They are related but not the same. You can think of eChecks as a specific type of electronic transfer that occurs over the ACH network. So electronic transfers are a more general term for electronic bank transfers including electronic checks, wire transfers, and direct deposits, and the automated clearing house network is a special channel banks use to conduct eChecks.
Read more: 6 Things to Know About ACH Wire Transfers
In short, there’s really no reason not to support eChecks — especially if you consistently bill for high ticket items. But even retail businesses or high-volume businesses can benefit from the increased flexibility and security inherent in electronic check and ACH network transactions. Plus, they are almost always cheaper when accepted.
Interested in supporting eChecks?
Tidal offers the latest in payment processing solutions and works hand-in-hand to save you the most amount of money while delivering a modern payment processing experience. We’ll even show you exactly how much we can save you before you sign anything.
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