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An eCheck — or electronic check — is an electronic money transfer sent from one bank account to another person’s bank account. It’s similar to a traditional paper check, but payers send it digitally.
If customers prefer to pay with eChecks, eChecks can be a safe, fast, and reliable electronic payment option. They also help businesses to receive direct deposits from customers or clients and facilitate recurring payments.
Here, we’ll answer common questions about electronic checks — including how they're sent and processed — to understand how they work and the benefits they provide to businesses.
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Electronic checks, also known as eChecks, online checks, direct debits, or internet checks, work similarly to paper checks. Instead of writing a check by hand and mailing it, an individual fills out their information online and sends the check electronically.
The Automated Clearing House (ACH) network then connects the banks and facilitates the transfer of funds between accounts.
Here’s a closer look at how eCheck payment processing works:
To accept payments via eCheck, businesses need to work with a payment processor that will help facilitate the eCheck payment and transaction.
They can also help set up a payment gateway to safely and smoothly accept eChecks at different points of sale, such as in-store or through an e-commerce website.
eChecks are typically a secure form of payment and can be preferred over payment methods like paper checks.
eChecks typically come with certain protections that can help businesses manage risk. Most notably, they’re verified by the ACH network, which authenticates customer information and encrypts data for enhanced eCheck security. eChecks also require timestamped digital signatures to help prevent fraud.
An ACH payment is any payment that’s made from one bank account to another and facilitated by the ACH network. eChecks are a form of ACH payment, but not all ACH payments are eChecks.
An electronic funds transfer (EFT) refers to any digital transfer of funds between accounts. ACH payments and eChecks are both types of EFTs, for example. Other types of EFTs include wire transfers, direct deposits, and digital wallet payments.
A wire transfer is a specific method of moving money electronically from one bank to another. The big difference is that wire transfers directly transfer money between two banks. That means they can move funds in minutes, but they can also be more costly and less secure.
eChecks, on the other hand, are processed and verified by an ACH network first, so they can take a bit longer to clear.
eChecks can provide a safe, fast, and more reliable alternative to traditional checks. eChecks are also a good solution for setting up recurring payments.
Customers can simply authorize recurring payments when submitting their eCheck information, and the ACH will automatically pull the funds from their account each month.
However, eCheck scams are possible. E-commerce scammers may use fake or stolen bank account information to initiate eCheck transactions, leading to unauthorized withdrawals from victims' accounts.
To avoid eCheck scams, verify the legitimacy of the payer or payee, be cautious of unsolicited eCheck payments, and use trusted payment platforms with security measures.
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When customers are ready to pay, businesses should be ready with their preferred payment methods. Even with credit card, debit card, and digital wallet acceptance, eChecks can help expand payment options and drive revenue.
As a payment processor, PayPal provides the tools to get paid securely online and in person. Organizations can use a PayPal Business account to start accepting eChecks from customers. Our eCheck fees are set according to current commercial transaction rates.
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