What Are Electronic Checks?

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Electronic checks or echecks include the following applications:

o WEB (Internet based)

o ARC (mailed payment check conversion)

o POP (check conversion-POS)

o RCK (NSF check recovery)

o TEL (telephone)

o PPD (consumer pre auth recurring one-time debit)

These applications are called eChecks because the merchant or biller uses a check as a source document for the consumer’s account information (RCK, POP, ARC) or the consumer is prompted to use their check as a reference to provide their account information (WEB, TEL). eChecks are used by merchants and billers as optional payment methods that are faster, more convenient and more secure than traditional check processing, which benefits both the company and the consumer.

Echeck Merchant Accounts

Echecks merchant accounts can be established for standard ecommerce merchants and high risk merchants.

The echeck payment processing gateway is integrated with the ecommerce site. Often times the credit card processing gateway will include an echeck module. If both echeck and credit card transactions are processed through the same ecommerce gateway, the merchant benefits from centralized reporting and easy merchant account transaction reconciliation.

When a buyer checks out, electronic checks are one of the payment options. The other popular payment option, of course, is payment with credit cards. When echeck is the chosen method, the consumer buyer enters the same type of information as with credit card processing. The difference is that the consumer enters the routing and account number of the checking account rather than credit card number and expiration date.

Consumer authorization is required is required with specific language that authorizes the merchant to process an electronic payment ACH debit transaction on behalf of the consumer. The authorization language is followed by instructions to the consumer to “Accept” or “Cancel” the authorization

After the consumer clicks “Accept”, the information submitted is parsed and sent to various authentication databases for an approval response including verifying the bank routing number and checking account number for accuracy.

The merchant establishes the refund policies for echecks, which are usually the same as for credit card processing. Merchants can refund directly back to the customer through the ACH network with permission from the customer.

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