Payments Evolve from Paper to Digital
In the not-so-distant past, transactions involved paper, ink, and a physical trip to the mailbox. Today, consumers expect immediate, seamless, and secure payments that can be completed with just a few taps or clicks on their smartphones. The widespread adoption of various digital payment methods has led to a significant decline in traditional checks across both commercial and consumer sectors. Even government entities, once major issuers of paper checks, are transitioning away from this method for tax refunds and other disbursements.
What Is an eCheck?
An electronic check (eCheck) operates much like a conventional paper check. It involves providing bank account details along with payment authorization to complete the transaction, but everything happens digitally, typically through secure online forms that streamline processing.
According to Hugh Thomas, Lead Analyst of Commercial and Enterprise at Javelin Strategy & Research, “Checks are now mainly used for one-off or high-value transactions. EChecks allow you to push a payment electronically using the same familiar processes as paper checks, but with added convenience.”
eChecks use the National Automated Clearing House (ACH) system for electronic fund transfers. This eliminates the need to wait for physical mail delivery and significantly reduces processing times while cutting down on manual errors and associated costs.
Thomas adds, “EChecks initiate an ACH transaction, but since they are sent via email, you save time and paper. They also allow appending important line-item details, similar to those found at the bottom of checks.”
A Wide Variety of Use Cases
eChecks offer multiple advantages that make them suitable for diverse scenarios.
Firstly, they provide a flexible alternative to credit or debit card payments. Customers without access to credit cards can still use eChecks for transactions.
Additionally, businesses benefit from direct and secure bank payments with minimal risk of fraud. Nacha reports that fewer than 0.03% of ACH transactions are returned as unauthorized.
For businesses, processing fees for eChecks are generally much lower compared to paper checks (about $1 each) or credit card transactions (typically 2%-2.5%).
The low costs make eChecks especially suitable for recurring payments. Authorize.net supports automated recurring eCheck payments, streamlining the process and ensuring predictable cash flow.
According to Don Apgar, Director of Merchant Payments at Javelin Strategy & Research, “The typical per-unit cost in an ACH transaction ranges from $0.10 to $0.25 for merchants, whereas credit card fees can be 2% to 2.5%. EChecks are more cost-effective and secure.”
An eCheck Case Study
While integrating eChecks may seem daunting at first, the setup process with Authorize.net is straightforward and seamless.
VIIRL Marketing, a provider of advertising and marketing services, has been using eChecks from its inception. Jed Winkler, president and COO, explains, “Automated billing is crucial for us. With hundreds of clients across the country, we bill them monthly using Authorize.net’s eCheck system. This not only saves time but also provides a more convenient payment option for our customers.”
Marcus Piazzisi, founder of VIIRL Marketing, adds, “Accepting eChecks benefits us and our clients by reducing fees, enhancing security, and providing an easy-to-use solution. It integrates well with all our payment options, and we can pass on the savings to our customers.”
Why Authorize.net Works for Businesses
- Quick onboarding and integration
- Lower transaction fees than credit cards
- Secure ACH processing with fraud protection
- Supports both recurring and one-off payments