eCheck now available in the USA
eCheck is a digital version of a paper check and is also known as an electronic check, online check, internet check, and direct debit. eChecks use the Automated Clearing House (ACH) to direct debit from a customer’s checking account into a business user's bank account, with the help of a payment processor.
eChecks are transmitted electronically, making transactions quicker, safer and easier. Clients making a payment simply enter their details and bank account information to send a one off payment to the business user. The client must have a US based Bank account in order to process an eCheck.
How do electronic checks differ from paper checks?
While eChecks are digital, paper checks are, of course, paper, and likely to become obsolete in the future. Fewer consumers are writing checks for everyday purchases or home expenses, preferring the convenience of digital payment types including eChecks.
eChecks also take less time to process than paper checks. There are a few reasons why: 1) the time and manual effort it takes to deposit paper checks at a bank; 2) paper checks require longer processing and hold times than eChecks; and 3) eChecks occur digitally, which speeds up the process.
HowToPay now offers its clients the ability to accept payments via eCheck. Eligible business clients will see the option appear either in the mobile app or the “Payment Request” email.
In order to accept eCheck payments, a business account user must first send a “Payment Request” to the client. HowToPay then sends the payment instructions to the client. The client then enters the information including their bank routing and checking account numbers. This is all entered into the secure online form.
Using this information, HowToPay can communicate directly with a customer’s bank. Once the funds are verified, the direct debit happens via ACH.
The customer’s bank: a Receiving Depository Financial Institution (RDFI) receives the request, verifies that the funds are available, debits the customer’s account.
While ACH funds have taken a few days to post in the past, the National Automated Clearinghouse Association (Nacha) that oversees ACH, has enabled new capabilities that now makes same day funding possible.