Electronic checks, also known as eChecks, are a digital version of traditional paper checks. They are becoming increasingly popular as a secure, familiar and convenient way to make payments online. Here’s a primer on what you need to know about electronic checks:
How do they work?
Electronic checks work by transferring funds from one bank account to another electronically. The process is similar to paper checks, but instead of physically writing and mailing a check, the information is entered online or through a mobile device.
What about security?
As eChecks are an electronic fund transfer (EFT), encryption is used to help avert fraud and data theft. From a B2B customer’s perspective, payment validation from a reputable on-line payment gateway, such as eTreem can reduce the risk of receiving bad or bogus checks. For customers, the transfer of funds electronically is much safer than issuing, printing and mailing a paper check – as there is no document to be handled and processed manually, so fewer people will have access to bank account information.
Security at 10X
The “EFT” classification gives eChecks even higher security protection as transactions are covered by Regulation E of the Electronic Funds Protection Act put in place by the Federal Reserve Board. The legislation gives users up to 60 days to resolve a transaction issue in the following categories:
- Unauthorized electronic funds transfers (EFTs)
- Incorrect EFTs to or from payor’s account
- Omission of an EFT from their bank statement
- Computational or bookkeeping errors made by the payor’s bank regarding an EFT
- Receipt of an incorrect amount of money from an automated teller machine (ATM) or an electronic payment terminal
- Errors involving pre-authorized transfers
- Requests for additional information or clarification concerning an EFT (citation)
How long does it take for an eCheck to clear?
eChecks are processed much faster than traditional paper checks. With paper checks, there’s a delay between the time the check is written and processed and the time the funds are available in the recipient’s account. This delay can be significant, especially if the check needs to be mailed.
Some EFT transactions can take up to 3 business days (from your scheduled payment date) to clear your account while others may clear your bank account the same day or even hours after they are issued. It’s dependent on both payor and payee’s banks, however, technology has now provided real-time or near-real-time processing – so we can expect faster EFT clearance on the horizon – if it’s not already there for your EFT transactions!
What are the benefits of using eChecks?
Electronic checks offer several benefits, including lower transaction fees and faster processing times. eCheck processing can also help improve cash flow by reducing the time it takes to process payments. This means that businesses can get paid faster, allowing them to put the money to work sooner. For businesses that rely on a steady stream of cash flow to keep operations running smoothly, this can be a significant advantage. And of course there’s an accessibility advantage, as any business with a bank account can use them!
If you’re looking for a reliable payment solution consider using eChecks. By working with an intelligent B2B platform like eTreem your organization can minimize the cost of processing eChecks and credit cards to realize savings directly to your bottom line. Contact us to find out how