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ACH and eChecks – are they the right payment options for you?

At E-Commerce 4 IM, we’ve helped plenty of high risk site owners who use more than one method of accepting payments for their products online. While we generally recommend setting up proper high risk credit card processing, sometimes you can benefit from receiving other payment methods.

Some of you might wonder whether you should start accepting eChecks or ACH payments for your online business. After all, for some types of companies eChecks and ACH payments can be handy. To give you some pointers we’ll go through a few critical aspects of both payment options.

Remember, if you’re looking for high risk friendly credit card processing or e-check services, we’re always just a call away.

We specialize in providing payment options that work for high risk business types, like online nutraceutical sales, mastermind coaching, and online health, beauty, and skincare products sales. With our decades of experience, we can provide you with the payment options your business needs. Contact us today to start selling high risk products online.

How does ACH work?

ACH refers to transactions processed electronically from one bank account to another through the Automated Clearing House network. The ACH billing method might not be the most common payment method out there, but it’s still a relatively simple option for many business types. For example, subscription-based online businesses can easily incorporate this as one of their payment options. It gives your customers a simple way to authorize your company to debit directly from their checking or savings account. This makes for a hassle-free transaction for both you and your customers.

However, you need to make sure you do this correctly. For example, you need explicit authorization to debit your customers’ accounts directly. This authorization also needs to comply with the ACH Operating Rules.

We suggest checking the NACHA (the electronic payments association) website for more detailed information on how ACH payments work. However, whether ACH payments is the way to go for your business depends on a few different factors. For instance, an ACH payment requires that the customer enters information that might feel more intrusive than what they’re familiar with. It’s one thing asking a customer to enter their card details; it’s another to ask for their account and routing numbers.

Regardless, if you sell supplements and nutra-products, or coaching and mastermind services, you’ll also need a high risk merchant account that fits your business. We offer merchant services for high risk businesses, specializing in credit card processing services, chargeback mitigation, and merchant account services. If you need help accepting payments online for your products, you can always get in touch with us.

What’s the ACH processing time?

While ACH payments can seem intriguing, the processing time isn’t the quickest. You should be under no illusions – you can’t accept ACH payments instantly. To clarify, you won’t receive the money in your accounts immediately. An ACH payment is effectively a direct bank transfer and is therefore processed “on bank time.” It can take 3 to 5 business days from when your customer initiates the transfer of funds from their bank accounts until you receive your payments.

How do electronic checks work?

Before we start discussing how electronic checks work, it’s useful to quickly explain what eChecks are. The simple answer to “what is an electronic check” is that they’re checks that you create and process online. It’s as simple as that. As such, the eCheck, or electronic check, is a fairly established method as far as online payments go. One of its benefits is the long-standing legal framework that applies to electronic checks since they’re legally pretty much like any other physical check. This leads us to how eChecks work.

eChecks work through four main steps:

  1. The customer needs to authorize either a one-off transaction or recurring transactions. This can be done through a variety of ways, from online forms, over the phone, etc., where the customer provides their account number (DDA) and routing number (ABA).
  2. Once the transaction is authorized, the payment information is sent to a payment processing service or payment gateway.
  3. The information is then submitted to the ACH network via a payment gateway.
  4. There are a lot of wheels in motion at the same time at this point, so this step might have some overlapping features. Effectively, the payment is being automatically withdrawn at this stage from the customer’s account. Then, you or your payment gateway will send a receipt of payment to them. After this, the amount is deposited into your bank account or into your payment gateway’s account. Usually, the processing of the funds into your account takes between 3 to 5 days.

The next question we get is often “are eChecks safe?” The answer is quite simply, yes. It’s as safe as most other established payment methods. As we mentioned earlier, eChecks have the benefit of a healthy and long-established legal system as it operates with the same legal framework as physical paper checks do.

Are electronic checks processed immediately?

While it’s true that it can take an eCheck hours (24 to 48 to be specific) to clear from the customer’s account, the whole deposit process takes 3 to 5 days. This is mostly due to security measures and payment processing procedures. These are steps that contribute to the safety and success of the transaction overall.

What’s the benefit of eChecks?

One of the benefits of eChecks is that, together with ACH payments, they have among the lowest fraud rates out there according to “Changes in U.S. Payments Fraud from 2012 to 2016: Evidence from the Federal Reserve Payments Study.” This can be very valuable for those who run high risk online stores.

As you’re no doubt aware, chargebacks and fraud are among the more common challenges high risk merchants have to deal with. It’s part of the territory. The good news is that with either ACH or eCheck payments, fraud is less likely to be an issue.

That said, you’ll want to make sure you set up your payment processing correctly for high risk sales. To do that, you need to have a high risk merchant account in place, as well as high risk credit card processing. If you need to set up high risk payment processing, you can contact us here or call us at 1 800 570 1347.

ACH vs. eChecks: summary

If you were previously unfamiliar with either or both ACH and eChecks, you could be forgiven for mixing them up. They are pretty similar in a few respects.

  • Neither have high fraud rates, which is an excellent thing for any high risk business owner.
  • Both have a payment processing time of between 3 to 5 bank business days.
  • Both are well established and secure payment methods.
  • The customer will need to provide account and routing numbers for both payment methods.

This begs the question “what’re the differences between the two?” For one, the information your customer provides, and which best suit what kind of customer plays a significant role in whether they are payment options you should provide.

When it comes to eChecks, we find that they don’t make the customer feel like they’re offering up a lot of extra information. It’s the same procedure that many are familiar with from standard paper checks.

While many can benefit from authorizing a series of ACH transactions, it might feel different when they have to provide account and routing information even though account numbers and routing numbers are necessary for eChecks as well.

These days, the two payment methods are basically the same thing. The difference is just that eChecks usually apply to an online purchase whereas ACH is the term for a credit, a payment, or a recurring membership where a customer fills out a form. Nevertheless, in 2019 they are basically identical.

In summary, these are both payment methods that have plenty to offer. However, for most customers, it might feel more familiar to just provide credit card information. This is why we would recommend that you consider offering either ACH or eChecks in addition to credit card processing, as most customers are more familiar with that option.

Contact us today to accept payments online

If you need help accepting payments online for your high risk products, contact us today. We’re always available through our website or on the phone at 1 800 570 1347. At E-Commerce 4 IM, we specialize in providing credit card processing and merchant services for online high risk businesses. This includes high risk merchant account services and chargeback mitigation. Contact us today, and we’ll help you process online payments in no time.




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