How are ACH and eChecks different?

eChecks and ACH are quite similar, and in fact, the two terms are often used interchangeably. ACH, or Automated Clearing House, is the process used to move money electronically from one bank account to another. An eCheck is an abbreviation of the term “electronic check,” and is more of a payment instead of a process. These electronic checks are now being used to replace traditional paper checks.

ACH Processing

With an Automated Clearing House, you will use the information associated with your bank account to manage payments. ACH can also be used to designate a credit to your account, such as a direct deposit from your job. ACH also makes it easier and more convenient to pay bills. For example, when you pay a bill via the website of your service provider, such as the power company or your landlord, you will need to use your account and routing number. Whenever someone asks you to provide these numbers to make a payment, this is ACH.


Electronic checks are similar to paper checks in that they are not the bank’s obligation. Additionally, they combine the transaction and the authorization for it within the same document. The bank which is making the payment will receive authorization for the transaction. As a result, eChecks allow banks to handle the risks in a manner which is convenient for any customer who uses a checking account. This is why electronic checks are popular among many small to medium sized businesses.

The Key Difference between the Two

The primary distinction between ACH and eChecks is the party that gets to keep the payment information and send the payments. For example, ACH is managed by specific entities which use the banking information you put on the enrollment forms to establish a recurring debit from any account you choose.  It will then process the debits either monthly or quarterly. It can also be used to automatically update the amount of the payment for the customers who use it.

Electronic checks and ACH, while similar, showcase different transaction types which are based on distinct business models. Their information flow is different, as well as the legalities which surround them. They are also distinct in terms of risk management. This is good for both consumers and merchants, because it allows different services and products to meet different needs and requirements. Electronic checks are based on newer technology, and were not in existence when ACH was first introduced.