What is an eCheck?
As India is moving ahead in technology, there are many things that can now be done digitally. An eCheck is a digital version of a physical paper check. It is also known as an electronic check, online check, or internet check. eChecks are sent electronically. This makes the transaction process faster, safer, and easier. It uses the same information that is used in a traditional paper check.
How do eChecks work?
eCheck payments are facilitated by the ACH (Automated Clearing House) network, an electronic network used by US financial institutions. With an ACH merchant account, an institution can withdraw payments for goods or services directly from its customers' bank account. Customers must authorize such payments either by a signed contract, acceptance of the website's 'terms and conditions', or a recorded voice conversation.
E-checks involve the following steps:
1. Customer authorization: The business entity must obtain authorization from the customer before initiating any transaction. This can be done through an online payment form, a signed order form, or a recorded call conversation.
2. Payment set-up: After authorization, the business entity enters the payment information into the online payment processing software. If the payment is of a recurring nature, this information also includes details of the recurring schedule. Once the information is correctly entered into the software, it is saved and submitted to begin the ACH transaction process.
3. ACH operator: The ACH operator sorts the funds requests and deposits the funds into the business bank.
4. Depositing funds: The customer's bank receives the request, verifies that funds are available, debits the customer's account, and credits the business entity's account. The payment software also sends a payment receipt to the customer.
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