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 let their payment processors handle the technical aspects of the system. In case of disputes, the merchant cannot do anything except 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 an electronic 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 Basically, this is a type of payment system where funds are withdrawn from a customer’s bank account and directly deposited into the merchant’s account.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 takes care of everything behind the scenes is called the Automated Clearing House. To process these payments, business owners must have electronic check processing. This system makes it possible to easily withdraw payments from the customer or client’s bank account.
Get an eCheck merchant account
If you already accept payments via credit cards, your merchant account may be ready to install ACH processing on the system. Many companies offer 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 must provide many details, such as processing volumes and the number of years you have spent running your business. Usually the application process is quite easy and quick. Also, the approval process is completed in a few days.
How electronic check 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 whole 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. Payment is finished
After receiving the check information, the payment processor withdraws the funds from the customer’s bank account and provides a voucher.
3. Funds are deposited into the merchant’s bank account
After the initiation of the transaction, the electronic check requires up to 3 days to settle 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 occurs. If you are a business owner, you may want to try this payment method to make it easy for your customers. This can help make your business more attractive to consumers and customers.
