ACH and e-Check Processing

To get ACH and e-Check processing services from your merchant service provider, you will have to put in an application that will require much the same information as was required when you applied to accept credit card payments. This will include all your business details, your Federal Tax ID and your estimated processing volumes. This application will then be processed for approval.

With customers’ payment preferences constantly evolving, you must keep abreast of the latest in payment technology if you want to remain competitive. e-check (or electronic check) payments are online payments whereby your business can withdraw payments for purchases or services directly from your customers bank account.

To affect this transfer of funds you need an Automated Clearing House (ACH) to facilitate the transfer. ACH is an electronic network for financial transactions. They process large volumes of credit and debit transactions in batches, and include direct deposits, payroll and vendor payments. Businesses are increasingly turning to ACH online to receive customer payments.

The rules and regulations that govern the ACH network are established by the National Automated Clearing House Association (NACHA) and the Federal Reserve.

How does e-Check processing work?

Electronic check processing is similar to paper check processing, only quicker and paperless.

The process requires four steps. These are:

• The business (seller or service provider) gets permission from the customer to process the transaction.
• The business inputs the payment details into online payment software provided by the merchant service provider (recurring payments can also be included).
• Once the payment information has been captured, the business can select ‘submit’ and the ACH transaction process is activated.
• The payment is automatically withdrawn from the customer’s bank account and an automatic payment receipt is sent to the business.
• Funds normally appear in the merchant’s account within a few days.

These steps initiate and complete the payment cycle.

Is an e-check the same as an EFT?

An Electronic Funds Transfer (EFT) is similar to an e-Check, but the processes differ quite substantially. The main difference is that an EFT is electronically processed by the customer via their banking account.

An e-Check is a payment transaction that is authorized by the customer but processed by the business (seller or service provider) that the customer bought goods or secured service from. The business requires the support of a merchant services provider that installs software linking the business to the ACH network. Once the business has captured the authorized payment and submitted it to the ACH, the funds are electronically withdrawn from the customer’s account and transferred to the business’s banking institution electronically.

In effect, and EFT is initiated by the customer and an e-Check is initiated by the business. One advantage of the e-Check system is that it gives the business the opportunity to control the payment process. The business can process the payment immediately, whereas a customer can commit to an electronic payment, but delay it for a number of days and the business has no control over the process. For more information about ACH and e-Check processing or to sign up for a merchant account, please call (888) 924-2743 or go to Charge.com.