What is an eCheck Payment and How Does it Work

When dealing with clients, accepting eCheck payments or electronic checks is an excellent way for business owners to make financial transactions more convenient. Today, millions of people in the U.S. prefer paying for goods and services with electronic checks over other modes of payment, including credit cards. As such, adding an eCheck payment option to your website’s checkout page helps increase sales.

But what exactly are electronic checks and how do eChecks work? In this article, we’ll take a closer look at these online payments, assess their benefits, and determine what your business needs to accept electronic checks as one of its payment methods.

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What are eChecks?

An electronic check or eCheck is a digital version of a paper check that transfers funds from a customer’s checking account into a merchant’s business bank account using a payment processor. This is considered a type of electronic funds transfer where money is transferred from one financial institution’s account to another account electronically without the direct intervention of the bank’s staff.

In the United States, eChecks are processed by the Automated Clearing House (ACH) merchant network, an electronic network that processes financial transactions between participating financial institutions like banks. Customers authorize ACH network transactions by signing a contract or using a website, enabling money to be transferred between accounts.

How are eCheck Payments Processed?

Processing an eCheck is very efficient and consists of three steps:

  • Customer authorization: In addition to signing a paper contract or using an online form, customers can authorize electronic check transactions over the phone.
  • Payment set-up: Businesses set up both one-time payments and recurring payments through a payment processing system.
  • Confirming payment: After receiving all payment information, a business submits details through the ACH system to withdraw funds from the client’s account and deposit them into the business’ account. The entire eCheck processing procedure usually takes three to five business days.

What Type of Business Transactions use eChecks?

Given the versatility of eChecks, many businesses and clients pay for products and services using electronic checks. These include both small businesses and big companies like PayPal that enable payees to purchase items with eChecks when the buyer doesn’t have a credit card or alternate source of funding attached to their PayPal account. This makes payment more convenient and encourages customers to use PayPal as their online payment method.

Because clients can set up electronic checks to make regular payments, eChecks are particularly useful for recurring financial transactions such as:

  • Mortgage payments
  • Car loan payments
  • Monthly rent payments
  • Legal retainer fees

What are the Benefits of Accepting eChecks?

Because they are transmitted electronically, eCheck financial transactions are quicker, safer, and simpler than many other modes of payment. This results in several benefits for both businesses and their clients.

More convenient

Unlike traditional paper checks, a digital eCheck does not need to be deposited at a physical bank and processes nearly twice as fast as a paper check. In 2018, the National Automated Clearinghouse Association (NACHA) updated its guidelines to allow processors to offer same-day funding for customers. This is a big advantage for clients who need to make fast transactions.


Processing fees for eChecks tend to be lower than credit card transactions. This is because instead of credit card networks, eChecks use the Automated Clearing House (ACH) for processing transactions between participating financial institutions like banks. This eliminates the need for credit card interchange fees, resulting in huge savings for subscription-based businesses that accept recurring payments as well as businesses that accept large payments.

Transfers made by the ACH network also save money since they take place in batches, making them cheaper to process than wire transfers that move money from one bank account to another one transaction at a time.


Switching from paper checks to eChecks reduces the 3.6 million tons of greenhouse gas emissions and 67.4 million gallons of fuel expended in transporting paper checks. Not only does this result in additional savings, it also provides a way to show the public that your business cares about reducing its impact on the environment.

Businesses appreciate receiving eCheck payments because checking account numbers don’t change as often as credit card numbers. As a result, clients don’t need to update their financial payment information as often and cash flows in more regularly.


ACH transfers can also be reversed after being initiated, unlike wire transfers, making eCheck transfers more secure for clients. Coupled with the encryption and tokenization that eChecks use to prevent fraud and data theft, eChecks reduce the chance of a business getting a bad payment while securing client payment information.

Given all of these benefits, it’s no wonder that ACH use has been steadily rising. According to NACHA, 6.8 billion ACH payments were processed in the third quarter of 2020. This was a 9% increase from the same quarter in 2019.

What Do Businesses Need to Accept eChecks?

In order for your business to accept eCheck payments from a customer, you must first collect the client’s financial information, including bank routing and checking account numbers. This can easily be done by providing a secure form web page on your website for clients to enter their information. Other businesses obtain this payment information over the phone or in person with a paper form.

Your business will also need to sign up for an Automated Clearing House merchant account to withdraw customer funds online. When setting up this account, a business must provide:

  • Its Federal Tax ID Number
  • The name and address of the business
  • The number of years the business has been in operation
  • Transaction processing volumes
  • Bank account number information

Increasing Your Payment Options with eCheck Payment

Adding eChecks as a payment option for your business services offers a safe and convenient way for clients to make financial transactions. Advertising electronic check options on your website helps attract customers and shows your company employs business practices that reduce waste and make payment easier.

In order to make this service as smooth as possible, make sure to choose a payment processor that supports the most popular payment methods in use today.

Stax is a highly ranked payments platform designed to simplify your payments through subscription-style merchant services.

Contact us to see how we can help your business grow and thrive in the digital world with efficient payment processing. 

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