The top five questions about eChecks

Monday, November 10, 2014

You’ve researched all of the different methods when it comes to accepting payments at your business – credit and debit cards, mobile payment methods, and even eChecks. But when it comes to eChecks, you still have a few questions. If your business is looking to accept eChecks or you’ve been asked by customers if you accept eChecks, this article can help. In this article, we’ll cover the basics of eChecks by answering the top five common questions about eChecks for businesses.

Question 1: What’s an eCheck?

As the name suggests, eCheck stands for electronic check. It’s the digital payment equivalent of a traditional paper check. When someone pays your business with an eCheck, it’s just like they’ve sent you a paper check – minus the hassle. With eChecks, you don’t have to wait for the customer to write you a physical check and put it in the mail or wait for snail mail delivery. 

Instead, the Automated Clearing House (ACH) network facilitates the direct debit transaction between the sender’s bank and the receiver’s bank to withdraw the correct amount from the payer’s checking account and then deposits the correct amount into the payee’s account. With eChecks, a customer must authorize the transfer for it to occur. This authorization often happens through customer signature, acceptance of a website’s payment terms and conditions, or other authorizations like an email or recorded voice message.

Here are the different parties who take part in the eCheck process:

  • Originator: The business or merchant cashing the eCheck. The originator starts the eCheck direct deposit process.
  • The business’s bank: The originator’s bank, also known as the Originating Depository Financial Institution (ODFI). They are the ones who place the request with the ACH network.
  • ACH operator: The ACH operator sorts all the requests and then transfers the funds from the customer’s bank to the business’s bank.
  • The customer’s bank: The bank that receives the request from the ACH operator. They are known as the Receiving Depository Financial Institution (RDFI) and they verify the funds are available and then debit the customer’s bank account before sending funds

So what’s the difference between electronic funds transfers (EFT) and eChecks? The simple answer is that EFT payments are a broader online payment category that includes eChecks, wire transfers, and even ATM transactions.

For merchants like you, eChecks give you the ability to not only receive funds from customers, but also pay other merchants for their goods or services. This can be especially helpful when you either receive or send recurring payments from other businesses or you’re sending large payments. Now that you know about eChecks, let’s take a closer look at how they work.

Question 2: How does an eCheck work?

You’re probably wondering how the eCheck payment process works. To start, it’s very similar to paper check payment processing. Instead of filling out a paper check that contains all of the payer’s bank account information, technology speeds up the process, allowing payers to fill out the information electronically. Besides expediting the process, eCheck technology helps to save paper waste as well. For businesses that send and receive a large amount of paper checks, the paper waste can really add up.

When sending an eCheck, the sender is providing the same information as a paper check. They’ll include their bank account and bank routing information. To process an electronic check payment, there are some steps your small business needs to take:
  • Get authorization: Your business requires permission from the customer to take the funds from the customer’s account. The customer authorizes this predetermined amount to be sent to your business. Without customer authorization, the payment will not go through.
  • Set up payment: Once your business has authorization, you’ll need to set up the customer’s payment information. You need to be sure to input everything appropriately, including the bank routing number and checking account number. This can be entered directly into your payment processing system’s software. Many payment processors allow you to specify if the eCheck is a single payment or a part of a recurring plan. If it’s going to be a recurring payment, you’ll have the opportunity to modify the details of the recurring payment.
  • Finalize: Next, you’ll ensure you entered the customer’s payment details correctly into the payment processing software before submitting the transfer request. The transaction then starts through the ACH system. The ACH system verifies the funds during this process.
  • Get the funds: Lastly, the funds from the customer’s account move through the ACH system and are deposited into your business bank account. 
We’ve taken a look at the process of accepting eChecks. Now, let’s find out how long this process can take.

Question 3: What is the processing time for eChecks?

While not instantaneous, eCheck processing time can take between three and five business days to complete – typically faster than the process of receiving paper check payments.
Breaking this down even further, the process can depend on your payment processor and both the customer’s bank and your bank. Usually, it takes about 24 to 48 hours for the funds verification process. During this time, the customer’s bank and your business’s bank communicate to ensure the funds are in the customer’s account and available. Once this confirmation occurs, the funds transfer takes place. This transfer is usually completed in 3-5 days. So, how do you start accepting eChecks?

Question 4: What does my business need to accept eChecks? 

Your business is ready to accept eChecks as a payment method. But what do you need to start? The first thing your business will need in order to start accepting eCheck payments is an eCheck or ACH merchant account. Just like a merchant account works for other forms of payment, it gives you access to the funds from an eCheck. To sign up for an ACH merchant account, you’ll need to work with a bank or a payment processor. Both solutions are available. Depending on the merchant services provider you choose, the following pieces of information is required:
  • Federal tax identification number 
  • Business name and address
  • Business history, including the number of years the business has been in operation
  • Transaction processing volumes
  • Bank account information
  • Any other details the merchant services provider needs
The ACH merchant services provider will then evaluate your business and make a determination, much the same way as they do when one applies for a regular merchant account. Once your business has approval, you can start receiving payments. It’s best to reach out to your merchant services provider to fully understand their processes.

To capture checks for remote deposits without ACH, you might need check-scanning hardware. However, because ACH transactions occur online, you won’t need hardware. However, depending on your merchant services provider, you may need certain software. Again, it’s best to talk directly with them to make sure you have everything you need. Now, let’s take a look at the benefits of eChecks for your small business.

Question 5: What are the benefits of eChecks for businesses like mine?

Now that you know more about eChecks, you’re probably wondering what the benefits of eChecks are for your business. Here are some of the benefits of accepting eChecks at your business:

Smaller processing fees

Because eChecks rely on the ACH network and don’t need the credit card networks, the electronic check processing fees are lower than credit card transaction fees. Therefore, eCheck transactions can save your business a lot of money in the long run in processing fees. Talk to your merchant services provider to learn about their pricing for eCheck processing.

Ease of use

For businesses that rely on recurring payments or process paper checks frequently, eChecks can save you time. Because ACH payments are so easy to set up, they are also more convenient for other businesses or your customers. 


eCheck payments are very reliable – and that’s good news for your business. Because they use ACH, eCheck payments are governed by the Federal Reserve and the ACH network. Both entities have strict guidelines for banks and merchant services providers. Also, customers’ bank information usually changes less frequently than their credit card information, so you’ll deal with fewer missed payments compared to having the customers’ credit card information on file.


Payments by eCheck are more secure than their paper counterparts. This is because there are fewer hands that the eCheck passes through between sender and receiver. Because eChecks can leverage data encryption technology, they’re also more secure than paper checks.

You’ve seen the benefits of accepting eChecks at your business. Business owners like you can save on processing fees, it works great for subscription or recurring payments, and it has the added benefit of greater security than paper checks. So if your business is ready to say goodbye to paper, it’s as easy as accepting eChecks.

Ready to work with a payment processor who can help you accept eChecks at your business?

Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind.