Electronic Checks FAQ

  1. What is an electronic check?
  2. How are electronic checks processed?
  3. What kinds of electronic checks are processed through the ACH network?
  4. Is electronic check processing a new service?
  5. Can Internet and MOTO (mail order/telephone) merchants accept echecks?
  6. Will electronic checks save merchants money?
  7. How do the costs for processing echecks compare with credit card processing?
  8. How quickly will the merchant receive settlement of funds?
  9. What training will be needed for customer service agents?
  10. Can echecks be used for international charges?
  11. Can consumers "chargeback" purchases like they can do with credit cards?
  12. Can the merchant’s bank can provide electronic checks as a payment option for internet/MOTO merchants.?
  13. Where will an Internet check transaction appear on the consumer’s bank statement?
  14. Is this process regulated and safe for consumers?
  15. How is a rejected transaction handled?
  16. Will the customer's checking account be secure?

 

  1. What is an electronic check?
    An electronic check is an form of payment whereby the money is transferred electronically from a buyer’s bank account to the seller’s bank account.

  2. How are electronic checks processed?
    There are 2 ways to process electronic checks. First, electronic checks can be processed through the ACH network. Secondly, electronic checks can be processed using Check 21 technology. High risk merchants generally use Check 21 technology to process electronic checks to avoid restrictive ACH rules and regulations regarding chargebacks and returns.

  3. What kinds of electronic checks are processed through the ACH network?
    • WEB (Internet based)
    • ARC (mailed payment check conversion)
    • POP (check conversion-POS)
    • RCK (NSF check recovery)
    • TEL (telephone)
    • PPD (consumer pre auth recurring one-time debit)

  4. Is electronic check processing a new service?
    Electronic checks have been used as a payment option for years. All types of businesses offer electronic checks to increase sales, improve cash flow, and give customers a convenient method of making payments.

  5. Can Internet and MOTO (mail order/telephone) merchants accept echecks?
    Yes. Electronic checks can be offered as payment option for any type of transaction for all types of merchants.

  6. Will electronic checks save merchants money?
    Yes. Merchants offering electronic checks as a payment option save money by decreasing operating costs, bank fees, return check collections costs and credit card fees.

  7. How do the costs for processing echecks compare with credit card processing?
    Electronic checks save merchants 50-90% over credit card transactions. Most businesses pay a low flat-rate per transaction for electronic checks. Credit cards charge a discount rate plus a transaction fee.

  8. How quickly will the merchant receive settlement of funds?
    Settlement of funds depends upon the type of electronic check processing.. For Check 21 electronic checks, settlement is generally next business day. For ACH processing settlement is within 2-4 business days.

  9. What training will be needed for customer service agents?
    No special training is needed. Electronic checks are accepted in the same way as credit cards. The only difference is that bank routing and account numbers are entered rather than credit card information.

  10. Can echecks be used for international charges?
    Presently, echecks are available only in the U.S. International merchants or U.S. merchants that want to accept international electronic funds transfers use our international payment platform to send and receive payments world-wide.

  11. Can consumers "chargeback" purchases like they can do with credit cards?
    Contingent liability for chargebacks is much lower for electronic check transactions than with credit cards. With credit card transactions a consumer has 6 months (180 days) to charge back a credit card transaction. For ACH electronic check transactions, a consumer has 60 days from purchase date to chargeback.. Check 21 electronic check transaction chargeback period is 40 days. Business to business echecks have a 3 day chargeback periods.

  12. Can the merchant’s bank can provide electronic checks as a payment option for internet/MOTO merchants.?
    Most banks do not provide electronic check services for internet / MOTO merchants.

  13. Where will an Internet check transaction appear on the consumer’s bank statement?
    For electronic checks processing with Check 21, a complete description of the transaction is included in the area where checks are listed. For ACH electronic check processing, the transaction appears as a line item in the same area as payments such as direct payroll deposits and ATM transactions, are listed.

  14. Is this process regulated and safe for consumers?
    Companies that process payments electronically (electronic checks, credit cards, ATMs) must adhere to government-mandated guidelines. The electronic process is governed under Regulation E, which governs all electronic processing, including ATM and credit card transactions. ACH electronic checks are governed by NACHA rules. Check 21 electronic checks are governed by UCC and long-established check regulations.

  15. How is a rejected transaction handled?
    Merchants have full online reporting and can track the details of all transactions. Rejected transactions can clearly be seen in the reporting details. The report contains all the information necessary to identify the returns so that you can decide whether to contact the consumer directly to follow-up.

  16. Will the customer's checking account be secure?
    Yes, echecks are actually more secure for consumers than paper checks. Paper checks are handled by more people in the payment process before arriving at the bank.
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