What is an eCheck?

eChecks, also known as electronic checks, are the digital version of the old fashioned paper checks used in banks and stores. Customers can use them to make payments to merchants who will accept them. When a customer sends an eCheck to pay for something, the funds won’t be placed in the account of the merchant immediately. Like traditional paper checks, eChecks must clear, and it can take as long as four days before the funds are deposited into the merchant’s account.

Why eChecks are Beneficial

Electronic checks are popular among buyers because when a transaction is initiated, the cash will be left in the buyer’s account for a number of days, giving them time to gain interest. Additionally, eChecks don’t incur debt in the same manner as credit cards. Electronic checks can also be used for invoices or money requests which are sent via companies such as PayPal.

eChecks are also beneficial to sellers because the funds are placed directly into their accounts electronically. In the past, when someone wrote a paper check to pay for a product or service, the seller had to take the check to their bank so that it could be manually deposited and processed. It could take days for the funds to clear, and if the buyer didn’t have the funds, the check would bounce. This flaw in traditional paper checks is why many stores and shops no longer accept them.

How eChecks Work

At the most basic level, eChecks are similar to traditional paper checks. A customer who wants to buy something in a store will write a paper check during checkout. However, this is where the similarities end, as the clerk will then scan the check through a reader which will analyze the data, including the account and check number, as well as the routing number. Because this information will be transmitted and read electronically, the clerk will immediately know if the check is guaranteed. If so, a receipt will be created which must be signed by the customer. The transaction will then appear on the customer’s bank account as a standard debit.

The clerk will upload the data scanned from the eCheck, which will then be sent to the payment processor used by their store. Processing usually takes a couple of business days, after which the funds will be available in the merchant’s account. Electronic checks are popular because they are faster and more secure.