What is an eCheck? How electronic checks work and how to accept payments

Are paper checks slowing down your small business payments? eChecks, or electronic checks, are a secure digital alternative to paper checks for fast and cost-effective fund transfers. 

These payment methods offer enhanced security and significantly lower fees, making them ideal for recurring payments and high-cost items. For a small business, that time (and money) matters.

According to QuickBooks' 2025 Small Business Late Payments Report, over half (56%) of small businesses surveyed reported being owed money from unpaid invoices, averaging $17.5K per business. Late payments can significantly impact cash flow and overall business health.

Today, we'll cover how eChecks work, why they matter, and how you can use them to speed up payments in your small business. 

Jump to:

• Understanding the basics of eChecks
• How does an eCheck work?
• How long does an eCheck take to process?
• What's the difference between an eCheck and other digital payment methods?
• How to accept eCheck payments
• Advantages of electronic checks
• Disadvantages of digital checks
• Common eCheck challenges and how to avoid them
• Choose the best payment setup for your business

Understanding the basics of eChecks

If you're looking to streamline your small business payments, you need to understand the basics of the eCheck. This payment solution provides a secure, cost-effective, and efficient alternative to traditional, paper-based transactions. 

Let's break down the essential concepts so you can put this tool to work for your bottom line.

What is an ACH Payment?

An ACH Payment is a broad term for any electronic transaction processed through the Automated Clearing House network, which is a US-based electronic fund transfer system. In simple terms, this system is a centralized method that banks use to transfer money without relying on paper checks or card networks.

For your small business, understanding this means realizing that when you accept an eCheck, you're using a highly regulated and reliable system for funds transfer.

What is an eCheck used for? 

eChecks are incredibly versatile, but they really shine when it comes to guaranteeing a predictable income stream. They're commonly utilized for online purchases, bill payments, and setting up recurring payments, as they are reliable and convenient. 

Example: If you run a gym, you can use eChecks to set up automatic, monthly membership fee deductions directly from your customers' checking accounts, reducing late payments and saving you time on collections.

Are eChecks safe? 

eCheck payments are a safe alternative to paper checks, which can be vulnerable to fraud. eChecks reduce the risk by using data encryption and eliminating the need to handle sensitive bank information physically.

Example: When a customer pays an invoice for your consulting services using an eCheck via a secure online form, their bank details are encrypted. This is much safer for you than accepting a paper check with their routing and account numbers sitting in your office for anyone to see.

How fast can an eCheck be processed? 

It's important to know that eChecks cannot be processed on weekends. The transaction must be processed through the ACH network during regular business hours (typically 3-6 days), so a payment can take a few days to clear.

Example: If a customer pays you for catering services on a Friday, the funds won't start moving until Monday and won't be fully available until later that week. You need to account for this in your cash flow projections and payment terms.

Why do eChecks decline? 

An eCheck can be declined for various reasons, such as insufficient funds or incorrect account information. Once the recipient's bank has processed a payment, it generally cannot be canceled.

Example: If a new client for your landscaping service provides incorrect bank details, their eCheck will be declined. You’ll then have to follow up and obtain the correct information, as the initial transaction isn’t easy to reverse or correct once submitted.

Who can use eChecks? 

Most people with a bank account can use eChecks. However, it's always a good idea to check with your bank or payment processor for any specific requirements or restrictions before initiating a transaction. By accepting eChecks, you expand the pool of customers who can pay you easily and conveniently.

Example: Offering eChecks as an option alongside credit cards and digital wallets ensures that customers who prefer or only use direct bank debits—like many corporate clients—can still pay you without friction.

How does an eCheck work?

eChecks offer a convenient way for merchants and customers, employers and employees, and small businesses to exchange money electronically. How this works:

eCheck transactions rely on the Automated Clearing House (ACH) system, which facilitates batches of electronic funds transfers (EFTs). ACH allows banks to exchange transaction details, communicating what to debit, what to credit, and to whom—all electronically.

Let’s take a closer look at how eCheck processing plays out step-by-step.

1. Customers authorize transactions

The customer authorizes a predetermined amount to be withdrawn from their account. You can’t receive funds until the customer approves the transaction. Ensure that your banking details are correct to avoid delaying the processing.

2. Funds travel via the ACH network

The funds are transferred electronically via the ACH network. Keep in mind that an ACH transfer is slower than a wire transfer. ACH conducts these transfers in batches rather than one by one, so it can take a few days to see money move. 

3. Funds move to the seller’s account

The amount is transferred from the payer’s financial institution to the seller’s financial institution. Processing times may vary, but eChecks typically take between 24 and 48 hours to verify and three to six business days for funds to be withdrawn and deposited into the respective business checking account. 

4. Seller can withdraw funds from their account

The money is withdrawn from the payer’s bank account and deposited into the payee’s bank account. Your small business bank account should now reflect the funds, and you can withdraw them.

How long does an eCheck take to process?

On average, an eCheck takes three to six business days to process through the ACH network. However, several factors can impact processing times. 

For example, some banks may have longer internal review times for eCheck transactions, which can extend the processing window. Also, if you’re sending an eCheck payment to your business account for the first time, processing may take longer due to additional security checks or account verifications.

What's the difference between an eCheck and other digital payment methods?

Electronic Funds Transfer (EFT) is a broad term that covers any type of electronic payment method. Wire transfers, ACH transfers, and eChecks are all examples of EFTs, but each has different features and benefits. Let’s take a look at how eChecks differ from these payment methods. 

eChecks vs. ACH transfers

Automated Clearing House (ACH) is a network that processes batches of electronic transactions. ACH transfers can be used for recurring payments, such as payroll or bills, or for one-time payments, such as online shopping or peer-to-peer transfers. ACH transfers typically take one to three business days to process, but they also tend to be cheaper and more convenient. 

eChecks are a type of ACH transfer that mimics the process of writing a paper check. eChecks require the payer to provide their bank account number and routing number, and the payee must authorize the payment. 

They’re safer than paper checks, as they reduce the risk of fraud and bounced checks. eChecks are also faster and cheaper than paper checks, as they eliminate the need for printing and mailing.

eChecks vs. Wire Transfers

Wire transfers send money directly from one bank to another, usually within the same day, making them much faster than eChecks. However, wire transfers cost more and are commonly used for time-sensitive or large payments, like buying a home. 

On the other hand, eChecks are slower and processed through the ACH system, but they’re cheaper and safer for everyday transactions.

How to accept eCheck payments

To accept eCheck payments as a business, you need a payment processor that supports this method and a secure online form that collects the customer's bank information. 

If you decide to use eChecks as a payment option, follow these steps:

1. Set up an ACH merchant account 

Your first step is to protect yourself and your customers. Don't just pick the cheapest provider; choose a reputable payment processor like QuickBooks Payments that explicitly supports ACH/eCheck transactions and utilizes robust data encryption.

Look for the following when choosing a provider: 

• Security: Confirm your provider offers tools to help prevent fraud, like chargeback protection.
• Access control: For maximum security, ensure your provider allows you to limit the number of employees who can access or view sensitive customer bank data (routing and account numbers). This minimizes your risk of a data breach.

2. Get customer authorization 

You’ll need your customer to approve this transaction before you can access the funds. Unlike simply swiping a card, the ACH network requires explicit permission. 

To approve an eCheck, you'll need:

• Required info: You need the customer’s checking account number, their bank routing number, and the payment amount.
• Proof of consent: Obtain authorization via a legally accepted method, such as a time-stamped digital signature on an online form or a properly recorded phone call. This consent is crucial if a customer later disputes a charge.

3. Enter payment details

Before you begin accepting eCheck payments, you’ll need to gather and submit key information to the ACH merchant.

You'll need to provide: 

• Federal Tax ID number
• Business name and address
• Transaction processing volumes
• Years in business
• Bank account details
• Customer’s checking account number
• Customer’s bank routing number
• Customer’s payment amount

As with any form of payment, merchants and customers are encouraged to protect their payment information. Notify your ACH provider if you need to change this information or suspect any fraudulent activity.

4. Run eCheck payment processing with the support of your ACH provider

Once you’ve set up your account, received customer authorization, and entered your payment details, you’re ready to process the payment and access your funds. Keep in mind that the process can take a few days to complete.

Since eChecks are a form of EFT that enables you to easily collect recurring payments, process payroll, and initiate online payments, prepare to enjoy a more streamlined payment process. 

Advantages of electronic checks 

eCheck transactions can be useful for recurring payments and direct deposit, but several other perks may benefit your business. 

Ease of use 

If your business frequently processes paper checks or has recurring customer transactions, eChecks can save you time. Your customers will benefit from having easier ways to pay, and you’ll reduce the risks of human error during payment processing. eChecks also provide a digital transaction log that feeds data to your accounting system, making reconciliation simple. 

Reliability

eChecks are generally a reliable way of transferring funds. They use the ACH network to process transactions. The ACH system is governed by the Federal Reserve as well as the National Automated Clearing House Association, which upholds strict regulatory guidelines for participating banks and providers.

eChecks pass through far fewer hands than paper checks, which speeds up the transaction process and mitigates fraud risk (more on that in a moment). If your business collects recurring customer payments, eChecks can be a more consistent payment method than credit cards. 

Cost-effectiveness

Another big benefit eChecks offer merchants and other small businesses is their cost-effectiveness. Processing fees for eChecks are typically more affordable than other payment methods, like credit cards, which can range between 1.5% and 3.5% of each transaction. All in all, accepting eChecks can reduce payment processing costs by up to 60%.

Security

eChecks are generally considered a safe, reliable payment option for both merchants and customers. On the customer’s side, eChecks leverage data encryption to protect sensitive details like bank routing information and account numbers. In addition, eChecks exchange fewer hands than sending or cashing a check.

As for the merchant, data encryption works in your favor, too. To mitigate the risk of receiving a bad check, it’s a good idea to research payment processors and ensure you’re only working with reputable providers.

Disadvantages of digital checks

Like any payment option, eChecks have both advantages and disadvantages. Now that you’ve had a chance to look through the positive aspects, let’s review some of the potential drawbacks.

Slower processing time 

As we covered earlier in this post, it typically takes between a few business days for eChecks to process fully. Other payment types, such as debit and credit card payments, are usually posted within one to three days. For some businesses, payment timelines are more flexible, while others may require greater efficiency in collections. 

Unfamiliar to some customers

Most customers are familiar with debit and credit card transactions that use the ACH network, but fewer are familiar with eChecks. Transitioning to eChecks may be challenging depending on your customer base, but it could also help expand your possibilities for doing business.

Common eCheck challenges and how to avoid them

If your business is thinking about accepting eChecks, there are a few bumps you might hit along the way. Let’s look at some of the most common challenges and how you can address them.

Insufficient funds

If a customer doesn’t have enough money in their account, the eCheck can bounce. This means you won’t receive payment, which may also result in additional fees. To avoid this problem, confirm the customer’s bank details before processing the payment. You can even use pre-authorization to ensure they have the necessary funds before you proceed.

Example: If you are a property manager collecting a monthly rent payment, instead of submitting the full amount immediately, your payment system could perform a small pre-authorization check (like a $1 debit) a few days before the official payment date. 

If the pre-authorization fails, you then know to contact the tenant before incurring fees for the full returned payment.

Incorrect banking information

Entering the wrong account or routing number can lead to failed payments and cause frustrating delays for both you and your customers. Before submitting an eCheck, have your customers double-check these details. Offering a simple step in your payment form where customers can verify their information helps catch errors before they cause problems.

Example: When onboarding a new client for a recurring consulting retainer, your online payment form should require them to enter their bank account number twice to ensure accuracy. The system can then instantly flag a mismatch, preventing a transaction failure that would otherwise delay your first payment by a week.

Fraud risk

Although eChecks are generally more secure than paper checks, there’s still a risk of fraud because scams like account hijacking or using stolen bank details can still happen. To mitigate this risk, ensure the payer or payee is legitimate, be cautious of any unsolicited payments, and always use trusted payment platforms with robust security features.

Example: You receive a large, unsolicited eCheck payment for services you haven't rendered. If you didn't initiate an invoice, contact the payer directly to confirm the transaction's legitimacy before processing any refund.

Returns and chargebacks

Like credit card payments, eCheck transactions can be disputed, resulting in chargebacks or returns. Be sure to keep thorough records of your transactions, and let your customers know your refund and dispute policies upfront.

Example: A customer disputes an eCheck payment for custom furniture. To successfully fight the chargeback, you must provide the payment processor with: 

• The digital signature authorization showing they agreed to the payment
• The invoice detailing the goods
• Proof of delivery (like a signed delivery receipt)

These records prove the transaction was legitimate and the service was delivered.

Choose the best payment setup for your business

Ultimately, selecting the right payment tools means minimizing costs, maximizing security, and simplifying your workflow. By integrating eCheck capabilities into your business processes, your business can achieve predictable revenue without incurring high credit card fees. 

QuickBooks Payments brings it all together—automatically matching transactions, consolidating eChecks, cards, and wallets, and keeping your books clean. And with the new Payments AI Agent, you can get instant insights into your payment activity, resolve issues faster, and ensure every transaction is accounted for. Start accepting eCheck payments easily to improve your business banking processes and reduce manual accounting effort.

QuickBooks reduces manual QuickBooks Payments matching by 60%: Calculation based on a comparison of total monthly QuickBooks Payments transactions with those that were automatically categorized from August 2022 through January 2023.