Looking to expand the payment options of your small business? Digital payments like eChecks can make receiving funds from your customer faster and more efficient than using physical checks.
But just what is an eCheck exactly, and why should you consider using it in your online banking routine? Read our guide to understand how electronic check payments work.
What's the difference between an eCheck and other digital payment methods?
EFT stands for Electronic Funds Transfer, which is a broad term that covers any type of electronic payment method. Wire transfers, ACH transfers, and eChecks are all examples of EFTs, but they each have different features and benefits.
ACH stands for Automated Clearing House, which is a network that processes batches of electronic transactions. ACH transfers are potentially slower than wire transfers, but they also tend to be cheaper and more convenient. 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.
eChecks are a type of ACH transfer that mimic 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. eChecks are 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.