Although e-check processing has only been around for a short while, there is growing evidence that the innovation couldn’t have come at a better time. Whether to the consumer or the bank, e-checks have definitely made life easier.
- What are e-checks?
At the most basic level, e-checks are simply electronic checks. It’s like emails and the traditional letters we used to write back in the day. The only difference is that with e-checks, you will still need to write the actual paper check before it is converted into digital format.
When a customer makes a transaction and chooses to pay through check, all they have to do is fill the traditional paper check which is then converted into a digital format. The clerk at the bank will capture a few necessary details on the paper check which helps in taking funds from the customer’s account into the merchant’s account. It’s a process that takes less than two minutes as the rest of transaction takes place via the Automated Clearance House system.
Some of the people who can enjoy e-check processing at its best include merchants who have accounts with providers such as eMerchantBroker.com.
- What is Automated Clearance House (ACH)?
The simplest definition of ACH is a system that electronically moves money from one entity to another. ACH is a safe and highly efficient nationwide electronic funds processing system. It provides for interbank clearing of electronic payments in a fast and secure manner. The whole process is governed by the National Automated Clearing House Association (NACHA).
- What types of transactions does NACHA oversee?
As already mentioned, NACHA oversees all electronic payment transfers that go through the ACH system. These include;
- Electronic checks (popular as e-checks)
- Business to Business payments
- Federal, state, and local tax payments
- E-Commerce payments
Recently, NACHA has also begun processing direct deposits of payrolls, tax refund, and social Security funds. They are also processing payments of consumer bills such as utility bills, loans, and insurance premiums.
In the future we could see the payment processer take up even more responsibility. What is clear is that it has made payment not just easier but much safer. With electronic check processing, in particular, there is little doubt that being able to complete the process at the clerk’s desk takes away risks such as losing or misplacing the paper check.
