An electronic check, also known as an e-check, works in much the same way as a regular check in that it’s drafted against the customers bank account. Electronic checks are a more convenient, safer alternative to paper checks when paying for goods and services and paying bills.
Electronic checks came into existence during the late 1990s, when they were instituted as another form of payment thanks to the increasing use of e-commerce and online bill payment systems. Today, electronic checks are a popular medium of transactions for consumers.
An electronic check can be authorized over standard telephone lines or online, but in either scenario, your customers account number, bank routing number, check number, dollar amount and their digital signature are securely encrypted. Their encrypted information is sent to a clearing house for authentication and, subsequently, payment. The funds are drafted out of the customer’s account and placed in the bank account of the company to whom the check is made payable.
An electronic check has more security features than traditional paper checks. The encryption feature of an electronic check verifies the customer’s account number and the dollar amount, and their digital signature is checked against the name on the bank account. These measures help prevent fraud and identity theft.
The biggest benefits of using an electronic check are speed and convenience. Electronic check payments expedite the flow of money in the commerce cycle by eliminating the need to mail a traditional paper check resulting in greater cash flow.
The time frame in which an electronic check clears varies. Depending on the financial institutions involved and the timing of the transaction, it can clear immediately or take up to three days to post to your account. Electronic checks presented over the weekend take longer to process, because most financial institutions are closed.
Global Processing Systems has the technology to get you started accepting electronic check acceptance, and check guarantee. Talk to us today to see what program is the right fit for your company.