How Electronic Check Payment Processing Works

If you are an experienced business owner, your customers may have used electronic checks in order 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 trader can do nothing except accepting the demands of the payment process. Therefore, it is important that you understand how these electronic payment systems work. Read on to know more.

If you manage 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-cheque. Basically, this is a type of payment system where funds are taken out from the bank account of a customer and deposited directly into the account of the merchant. The network that takes care of everything behind the scene is called an Automated Clearing House. For processing these payments, business owners have to have an e-cheque processing. This system allows easy withdrawal of payments from the bank account of the client or customer.

Getting an eCheck Merchant Account

If you already accept payments through credit cards, your merchant account may be ready to install ACH processing to the system. Many companies provide these services for online businesses. So, you can choose from a lot of 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 the processing volumes and the number of years you have spent managing your business. Typically, the application process is quite easy and fast. Plus, the approval process is completed within a few days.

How eCheck Processing Works

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

1. Purchase Authorization

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

2. Payment is Finalized

After receiving the cheque information, the payment processor takes out the funds from the bank account of the customer and provides a seat.

3. Funds are Deposited into the Bank Account of the Merchant

After the initiation of the transaction, the electronic check requires up to 3 days to clear and transfer the funds into the account of the merchant.

Recurring Payments

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

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