How Electronic Check Payment Processing Works

If you are an experienced business owner, your customers may have used electronic checks to make payments. Since many merchants find this system difficult to understand, they allow their payment processors to take care of the technical aspects of the system. In case of disputes, the merchant can do nothing more than accept the demands of the payment process. Therefore, it is important that you understand how these electronic payment systems work. Read on to learn more.

If you run a business, you may want to have at least a basic understanding of how electronic check processing works.

Let’s start with the definition of e-check. Basically this is a type of payment system where funds are withdrawn from a customer’s bank account and directly deposited into the merchant’s account. The network that handles everything behind the scenes is called the Automated Clearing House. To process these payments, business owners must have electronic check processing. This system allows you to easily withdraw payments from the customer’s or customer’s bank account.

Get an eCheck business account

If you already accept credit card payments, your merchant account may be ready to install ACH processing in the system. Many companies provide these services for online businesses. Therefore, you can choose from many options based on your business requirements and personal preferences.

As soon as you have found a processing account that can meet your requirements, you need to fill out the form. You need to provide a lot of details, such as your processing volumes and the number of years you have spent running your business. The application process is usually quite simple and fast. Also, the approval process is completed in a few days.

How eCheck Processing Works

There are many similarities between handling paper checks and processing electronic checks. The difference is that electronic checks are processed much faster. Below is the description of the entire process. For a better understanding, we have divided the process into three steps:

1. Purchase authorization

For purchase approval, customers can fill out an online form or have a phone conversation. After authorization, the check information is sent to the payment processor.

2. The payment is finalized

After receiving the check information, the payment processor withdraws the funds from the customer’s bank account and provides a journal entry.

3. The funds are deposited into the merchant’s bank account.

After the start of the transaction, the electronic check requires up to 3 days to clear and transfer the funds to the merchant’s account.

Recurring payments

One of the most common ways to make payments online is through credit cards. However, when it comes to recurring transactions, electronic checks provide the best solution. This is why ACH billing is gaining popularity among real estate managers. The reason is that they can easily collect the monthly rent.

In summary, this was a brief overview of how electronic check processing happens. If you are a business owner, you may want to try this payment method to make it easier for your customers. This can help make your business more attractive to customers and clients.