What is an eCheck? How to accept electronic checks in your small business

Like many things, the way we make transactions today looks much different than it did a century, decade, or even a year ago. From the bartering days of medieval periods to the contactless mobile payment systems of the present, it can be hard to stay on-trend with today’s transaction types.

eChecks, also known as electronic checks, are a payment method designed to facilitate online transactions securely.

In this post, we’re taking a closer look at how eChecks work, their pros and cons, and how your small business can start accepting eChecks as a form of payment.

Read on to learn the ins and outs of eChecks, or use the links below to navigate to the section that best covers your question.

What is an eCheck?

eChecks, also called electronic checks, are an alternative to paper checks, designed to process payments digitally. eChecks use the same information you’d find on a traditional paper check, like your bank account number and your bank’s routing number, to send funds. Electronic checks are sometimes called ACH payments, ACH transfers, or direct debit.

Illustration of check with the text “eChecks are an alternative to paper checks, designed to process payment digitally.”

How does an eCheck payment work?

eChecks offer a convenient way for merchants and customers, employers and employees, and small businesses to exchange money electronically. But how exactly does this process work? eCheck transactions rely on a system called the Automated Clearing House (ACH), which facilitates batches of electronic funds transfers (EFTs). In the most basic sense, 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.

The eCheck process

When you send someone an eCheck, you’re providing the same information you’d find on a paper check and authorizing a transfer of your funds directly into the payee’s checking account.

  1. The customer authorizes a predetermined amount to be withdrawn from their account.
  2. The funds are transferred electronically via the ACH network.
  3. The amount is transferred from the payer’s financial institution to the seller’s financial institution.
  4. The money is withdrawn from the payer’s bank account and deposited into the payee’s bank account.
Flow chart depicting the 4 steps of sending and processing an e-check, as described in text above.

eChecks vs. ACH payments: What is the difference?

As we mentioned earlier in this post, ACH is the system that’s used to process EFTs, like eChecks. The main difference to note is that ACH is the process used to initiate electronic transfers, while eChecks are a payment method, not a process.

How long do eChecks take to process?

eChecks typically take between 24 and 48 hours to verify and between 3-6 business days for funds to be withdrawn and deposited into the respective accounts. The reason eChecks are not processed instantaneously is that they use a third-party system (ACH) to initiate the EFT. ACH conducts these transfers in batches, rather than one by one, so it can take a few days to actually see money move.

Illustration of clock with the text “eChecks typically take between 3-6 days to fully process.”

Should your business accept eChecks?

Wondering if your business should accept eChecks? Before you add a new payment method to your processes, take a moment to read up on the pros and cons below.

The benefits of eChecks

eCheck transactions can be especially useful for recurring payments and direct deposit, but several other perks may be beneficial for your business. Below, we’ll outline three of the main benefits eChecks offer business owners.

Ease of use

If your business frequently processes paper checks or has recurring transactions with customers, eChecks can save you time. ACH payments are a convenient and secure payment method for  B2B transactions . Your customers will benefit from having more easy 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.


eChecks are generally considered to be a reliable way of transferring funds. eChecks 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 not only speeds up the transaction process but also mitigates fraud risk (more on that in a moment).

If your business collects recurring payments from customers, eChecks can be a more consistent payment method than credit cards. For the most part, individuals don’t change their bank account information often—or ever—so you’re likely to have fewer payment gaps than having credit cards on file, which change every few years.

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% to 3.5% of each transaction. All in all, eChecks can reduce payment processing costs by up to 60%.

Illustration of hand receiving money, with the text “eChecks can reduce payment processing costs by up to 60%.”


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 paper 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 do your research on payment processors and make sure you’re only working with reputable providers.

The drawbacks of eChecks

Like any payment option, there are both advantages and disadvantages associated with eChecks. 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 usually takes between 3 and 6 business days for eChecks to process in full. Other payment types, like debit and credit card payments, are typically posted much faster, between 1 and 3 days. For some businesses, payment timelines are more flexible, while others may rely on more efficiency when it comes to collection.

Unfamiliar to some customers

Most customers are familiar with debit and credit card transactions that use ACH, but fewer are familiar with eChecks. Depending on your customer base, it may be challenging to transition to eChecks, but more options also expand your possibilities for doing business, which is never a bad thing.

How to accept eChecks in your small business

If, after reviewing the pros and cons, you decide to use eChecks as a payment option, follow these steps:

  1. Set up a merchant account with an  ACH provider.
  2. Get customer authorization via digital signature or recorded phone call.
  3. Enter payment details, including checking account numbers, routing details, billing amounts, and billing schedule.
  4. Run eCheck payment processing with the support of your ACH provider.
Graphic shows title “How to accept eCheck payments” with numbered list of steps as listed in text above.

Security considerations to keep in mind when accepting eChecks:

  • Only work with reputable  ACH transaction providers.
  • Make sure customer and business data is encrypted.
  • Only authorize employee access to financial data when necessary.
  • Notify your ACH provider of any fraudulent transactions immediately.

Final notes

It’s important to do your research before you decide to include them as a payment method. As you navigate the complexities of electronic payments, specifically eChecks, keep these key points in mind:

  • eChecks are a form of EFT that enables merchants to easily collect recurring payments, process payroll, initiate online payments, and more.
  • eChecks use the ACH network to electronically transfer funds between merchant and seller bank accounts.
  • eChecks are viewed as a reliable, safe, and cost-effective alternative to paper checks, wire transfers, credit and debit transactions, and other payment types.
  • Like any form of payment, merchants and customers are encouraged to use security recommendations to protect their payment information.

eChecks can be a welcome addition to your business’s list of accepted payment options that make getting paid safe and paper-free. Accepting eChecks with  QuickBooks Payments , you’ll get lower rates than PayPal and Square and your books will automatically reconcile for every payment you accept. Plus, you’ll be able to accept many more types of payments, giving your customers options and making it easy for you to get paid.

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