An electronic cheque, sometimes called an ACH Direct Debit or an E-Cheque, is a digital equivalent of a traditional paper cheque. When you utilize an electronic cheque, money is moved electronically via an ACH payment from the payer's current account to the payee's account. This is comparable to the procedure that uses a paper check, but it is quicker and does not require any physical interaction. Money can be moved between bank accounts via electronic checks. E-cheques are faster, more convenient, and safer than paper checks because they are digital.
An e-check is a payment mechanism that includes the same information as a paper cheque (checking account number, bank routing number, and payment amount), but the entire transaction is handled online. An e-check, also known as a direct debit, contains the same information as a paper cheque but manages the entire transaction online. The e-check, which is faster than a paper cheque and less expensive to process than credit cards, is an excellent method to improve the payment experience for your consumers while also modernizing your accounts receivable (AR) processes. E-Check payments are a sort of direct debit. This differs from a direct deposit in terms of who initiates the transaction.
Electronic checks are a popular payment method for expensive things since they do not incur the same high processing fees as credit card payments. They are also commonly used for regular payments, such as rent. When making recurring payments with e-check, consumers only need to submit authorization once. This makes e-check an attractive option for firms that collect payments through subscriptions or membership fees. In the United States, all e-check payments go through the ACH network; however, not all ACH payments are e-check. This distinction is significant since the costs and processing channels will differ based on the kind of ACH transaction.
How does e-check payment processing work?
The ACH network processes several transactions in batches, whereas wire transfers are started individually. Because of this, wire transfers are more expensive to originate than ACH payments. Electronic Funds Transfer (EFT) is a term that is often used interchangeably with ACH, although it is important to note the distinction. An EFT is a broad phrase that refers to any electronic transfer of payments from one bank account to another. An EFT can be a wire transfer, an ACH, or an e-Check. Because the ACH network processes payments in batches, it may take two to five business days for funds to show in your account after a consumer pays with an e-check.
A paper cheque takes roughly the same amount of time to settle (three to five business days). However, because e-check does not require you to wait for the check to arrive in the mail before visiting your bank branch to deposit the funds, they are a faster payment method than physical checks.