As more than half of Americans now pay their bills online, numbers of people who are getting their paychecks or payments from vendors are also climbing.
If you’ve heard the term but you’re wondering — “what is an eCheck?” — it’s time to see what they can do for your organization. Accepting and processing electronic checks is a breeze and if you’re not doing it, it’s time to start.
Here’s everything you need to know about how to process an eCheck.
What Is an eCheck?
Getting an eCheck might seem confusing if you’re used to getting paper checks. Even if you’re comfortable sending and receiving online payments, it can be hard to understand how to use them.
eChecks are meant to fit within the standards and practices of modern banking. Rather than having all of the manual steps in the way of getting paid, this skips a few and puts money in your account sooner.
There are typically state-of-the-art security measures employed for these payments. They are able to serve customers in small- to mid-sized businesses and usually come from your clients in that size range.
If you’re looking to enhance your e-commerce implementation, this is the way to go. It’s different than a typical EFT or electronic funds transfer, so it’s important to understand the distinction.
eChecks are used in the same kinds of transactions where paper checks would be used. They give added value even as they electronically withdraw funds in the same way a check does.
How eChecks Work
To send an eCheck, you need a person to write and sign the check digitally. There needs to be a receiver there to get the check. In some cases, the check can be sent to someone via email, while in other cases the two parties need to use the same check provider.
In order for the payee to “deposit” the check, they either have to link the check to their bank account and routing number or they have a paper check sent. Since this adds an additional and longer step to the process of getting paid, most people link their accounts. The payee’s bank clears the check and the sender’s bank then transfers the money.
When the paying bank has validated the check, the sender’s account is debited. This is the same way that checks have been written for more than a century — just now online.
Why Do People Use eChecks?
As a business or service provider, you might wonder why it’s useful to use eChecks.
In a situation where you could receive a standard paper check just as well, it might not make a lot of sense. However, as more payments move online, more vendors are being sourced internationally by firms around the world.
eChecks have more features than were ever possible with paper checks. There’s less of a chance of any fraud happening or anyone losing out on a transaction. All the content is automatically validated.
You also get all of the traditional checking features, like being able to stop payments or easily reconcile payments. You’ll also find that dates are more accurate so that you know when payments can be expected and your vendors will, too.
eChecks can be used by anyone, no matter how big or small their business is. It’s a great option when you need to securely and quickly settle financial obligations. You can initiate it from lots of platforms and different software applications.
These days, if you need a secure payment method, this is the way to go.
They’re Extremely Secure
eChecks have all kinds of measures to ensure that your payments are secure. You’ll never have to worry about your payment information getting released or your finances being intercepted.
You get secure authentication and public-key cryptography when you use eChecks. Digital signatures help to ensure that there are no problems with duplication and that all certification authorities are properly contacted.
Banking practices, in general, can be enhanced with the security measures that allow everything to be properly encrypted and protected. Even if someone breaks into your cryptographic protections, fraudulent transactions won’t usually be paid out.
They’re Soon to Be a Leading Payment Method
eChecks allow banks to sustain their position and be functional in the future. The payment system that they use is fundamentally built on the already-established methods created by other types of payment.
In actuality, institutions who jump on this method of payment as an option will be at an advantage. They’ll use the existing relationship between customers and clients by not requiring them to find new channels for payment. Relationships will be stronger in the end because companies will be able to grow at their own pace without having to stress about finding new solutions to get paid.
Checks are a strong payment instrument and losing them could be catastrophic. This many systems set up for check payments don’t have to be discarded. The universal set of technologies set up for effective payments can be leveraged at a greater speed than ever.
Soon, you’ll find people at every level of an organization using this payment method. Be the first in your industry.
Using eChecks Is Easy
If you’re still wondering “what is an eCheck?”, it’s time to stop wondering and start using them. They’re one of the best new methods of getting paid and paying other people.
If you’re worried about how eChecks will impact your cash flow, follow our guide for tips.