Are eChecks Safe?
If you’re setting up your company’s first online presence or are upgrading your payment options on an existing eCommerce site, you may be wondering about eChecks and other forms of online payment. As a thriving business with big goals, you want to offer your customers the most options to make their online buying experience as easy and secure as possible. You may be asking yourself “are eChecks safe for my company and my customers?” In this article, we’ll explain what eChecks are and examine the benefits, including how safe they are when compared to other forms of online payment.
What is an eCheck?
An eCheck, also known as an electronic check, internet check, online check or direct debit, is a digital representation of the traditional paper check. The eCheck has been around for quite a while. Two common uses for eChecks are when employers directly deposit wages into an employee’s bank account and when the IRS issues a tax refund. Many people use electronic checks to pay bills online.
How Do eChecks Work?
eChecks work the same way as paper checks in that they transfer money from one entity to another. However, the payment is made through the Automatic Clearing House (ACH) Network. No paper changes hands, so it’s much faster and less expensive. Once an online customer selects the option to pay by eCheck, they enter in their bank routing number and checking account number. The payment gateway for that merchant transmits the encrypted information to an electronic check acceptance service. They use databases and fraud prevention tools to validate the person’s identity and determine the transaction risk. The transaction is approved or declined and the merchant is notified. If approved, the customer authorizes the transaction and the funds are withdrawn from their bank account. These funds are then delivered to the merchant’s account.
Key Features and Benefits of eChecks
One of the main benefits of eChecks is the speed of the transaction. It no longer takes days for a check to clear, as the approval process is done entirely electronically. Merchants will see a boost in sales, since online shoppers buy from sites that give them various payment options. Processing fees are lower than for credit card processing. It’s easier to implement, once the merchant chooses a certified gateway partner. There is also reduced risk, since checking account details are verified and a database of bad checks and other risk parameters provides the necessary screening.
But Are eChecks Safe to Use?
Since the early days of online fund transfers, electronic encryption has greatly improved, preventing fraud and data theft. From a merchant’s point of view, signing up with a payment gateway for their payment validation and guarantee services can minimize or eliminate the risk of receiving bad checks. For customers, transferring funds electronically is safer than a paper check, since there is no document that gets handled, and far fewer individuals will have access to their account information. If a fraudulent charge is made to an account, customers are protected by Regulation E (Reg. E), which requires banks to allow a consumer to revoke a payment if they consider it fraudulent. They can do this within 60 days of their bank statement on which the charge occurred.
eCheck Transactions: Giving Your Customers Peace of Mind
When you partner with a qualified payment gateway, your customers will know that your company is backed by an experienced staff of IT, fraud and statistical experts, and that they have direct relationships with banking institutions. ACH payment plans include verification, fraud prevention and risk analysis for all eCheck transactions, whether done online, at a point-of-sale (POS) system, by mail or by telephone. The payment gateway company uses extensive security measures including sophisticated encryption and secure data storage.
*Please note that we only support merchants that are based in the United States or Canada at this time.