What Is an eCheck (Electronic Check) Payment

With electronic payments being the norm and cash payments and traditional checks becoming less common year after year, it can be tough keeping up with all the various forms of payments available to your business.

But, as a business owner it’s important to understand the pros and cons of each payment type you can and do offer to your customers, and the more sales you transact the more important the charges and flexibility of these payment options become.

Rapid growth requires a proper foundation across every facet of your business, and payment processing is a big part of that. Transaction fees really add up, so even a small percent change can mean big savings for your business in the long-run.

And it’s not just about keeping an eye on transaction fees, providing the best option for your customers increases customer satisfaction and online conversion rates.

With this in mind, let’s take a look at one form of electronic payment, the eCheck.

What is an eCheck?

eChecks, or electronic checks, are an electronic payment withdrawn from a customer’s checking account and transferred over the ACH network to the participating merchant’s account.

They function and perform almost exactly like traditional checks, but you don’t have to run to the bank or worry about employees misplacing or destroying them.

So what’s the big deal?

In general, electronic checks are more secure, cheaper, and more convenient than physical checks. Accepting them online is a fairly simple process, and they can really help grow your business when utilized correctly, although the requirements are slightly different than taking credit card or debit card transactions through an online gateway.

Unlike credit card payments, eChecks require a routing number and checking account number and either a signed contract, acceptance of a Terms & Conditions contract, and/or a recorded voice memo.

Are eChecks the same as electronic transfers or ACH payments?

Not quite. They are related but not the same. You can think of eChecks as a specific type of electronic transfer that occurs over the ACH network.

So electronic transfers are a more general term for electronic bank transfers including electronic checks, wire transfers, and direct deposits, and the automated clearing house network is a special channel banks use to conduct eChecks.

How do eChecks work?

Here’s the general process:

  1. The electronic payment is authorized and verified by the merchant POS or online gateway. This is where the customer inputs their routing and checking number and agrees to certain Terms & Conditions as noted by your gateway.
  2. The transaction and payment information is recorded and delivered to the participating banks by the merchant’s payment software.
  3. The merchant (you) approves or denies the transaction (determined by established security measures).
  4. If approved, the funds are withdrawn from the customer’s checking account and delivered to the merchant’s connected account within 3-5 days.
  5. Merchant software automatically delivers a receipt to the customer to their email address.

It sounds a little convoluted, but remember that software handles pretty much all of this.

And the beauty of eChecks is, once a customer is set up, it’s super easy to conduct another payment through it. This makes it useful for businesses that have lots of repeat customers. It’s more convenient and cheaper for both parties, which brings us to why else you should support eChecks.

The pros of eChecks

Here are the biggest benefits of accepting eChecks:

  • Great for subscription or retainer-based businesses. By supporting eChecks, you have access to the convenience of ACH network payments including recurring auto-drafts. Combine this with an online invoicing system to fully automate your customer experience. If you run a Saas business or have any sort of monthly invoice, you are doing yourself a huge disservice if you don’t support eChecks.
  • Cheaper transaction fees. eChecks are typically a low, flat fee (typically $0.50-$2) instead of a percent cost like most transaction fees, which means you can save lots of money on larger transactions. Think about it. If most percent fees range between two and five percent per transaction and you’re a B2B company billing $5,000/month to a client, you could save hundreds of dollars a year from one client. Now extrapolate that across the next five years for your business… As you can see, this really adds up!
  • Simpler for customers and reduces your labor costs. Supporting and suggesting eChecks means no more opening up mail, having to drive to the bank to deposit it, etc. Every hour of labor you save is money back in your business’s pocket. And it’s easier for customers, too. If they love and enjoy your service, don’t make them conduct separate payments or mail-in checks — just set them up with eChecks. By reducing the number of times a customer interacts with their monthly bills, you can increase convenience and retention rates.
  • Increased security. Physical checks are more prone to fraud than ever, and avoiding them is a safer and cheaper option. Plus, eChecks use a variety of digital measures like AVS and CVV to ensure customer and merchant safety, so they’re often safer than traditional credit card transactions.

The cons of eChecks

While eChecks are generally a good idea to support regardless of the type of business you run, there are some cons to make note of:

  • Slower than most payment types. While payments over the ACH network are getting faster, they are still slower than credit cards. While payments are typically cleared within two days, payments take 3-6 days to process, so your business won’t collect its money as fast. This shouldn’t be an issue unless you often have a need for shuffling money around at a moment’s notice.
  • Less familiar for customers than credit card payments. Most customers only need their routing number and checking account to authorize an eCheck payment, but this won’t feel as familiar online as credit card payments are outside the context of a recurring subscription. Most customers are used to eChecks in that context. Regardless, it’s good business to monitor your online conversion rates whenever you add or take away a payment type.

How to support eChecks in your business

All you need to support eChecks is to make sure the merchant services provider or merchant account you use has an ACH merchant account. Almost all major payment processing solutions providers have the ability to accept payments over the ACH network, and they should have a system built in to accept eChecks.

Don’t have a merchant services provider? Learn more about Tidal Commerce.

As we mentioned earlier, transaction fees are almost always lower for eChecks, but these can vary depending on your provider. Make sure you do your due diligence and see what your current or potential merchant service providers charge for each transaction type.


In short, there’s really no reason not to support eChecks — especially if you consistently bill for high ticket items. But even retail businesses or high-volume businesses can benefit from the increased flexibility and security inherent in electronic check and ACH network transactions. Plus, they are almost always cheaper when accepted.

Interested in supporting eChecks?

Tidal offers the latest in payment processing solutions and works hand-in-hand to save you the most amount of money while delivering a modern payment processing experience. We’ll even show you exactly how much we can save you before you sign anything.

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