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BENEFITS OF PROCESSING
ELECTRONIC CHECKS VIA THE ACH NETWORK
Most people would have
paid several of their bills with the
check. Then, the company has to sort out
the cheques, manually, deposit it in the
bank and wait for a couple of days
before it is processed. However, in this
digital age, processing of paper cheques
in this way is very unlikely and very
inconvenient. E – Check or electronic
check processing is the method used now.
E – Check processing enables businesses
to accept payments in the form of paper
checks and then collect money from the
bank account electronically, through the
ACH or Automated Clearing House network.
This is the same network which is used
for direct payments and direct deposits.
According to official
reports, one billion paper checks got
converted in to ACH based payments in
the year 2007.
What are benefits can be
achieved by converting the paper checks
to eChecks?
Benefits to your
business:
Converting to eChecks
will drastically reduce the operating
costs of your business. The cost of
processing a paper check costs about
$1.22 whereas, processing of eChecks
will take about $0.55. Apart from money,
your business would have saved a lot of
resources and time which would other
wise has gone waste.
eChecks will also improve
the liquidity situation of your business
and you will receive the payments on –
time. It benefits both the business
owner and the consumer because the
consumer can send the eCheck in an email
or over the phone, making it very
convenient for the consumer to send and
the business owner to receive. If your
company is linked with a good online
payment system, then you will be able to
track the bank account and get the NSF
notification much earlier than the
manual processing method. Also, there
are several anti – fraud and anti –
cheating measures by which the eCheck
can be verified on the spot for details
and balance of the account, thereby
reducing the amount of NSF fines that
has to be paid by your business.
Benefits to the Consumer:
Consumers also greatly
benefit by using the eCheck as a payment
option. The consumer does not have to
pay postage charges each time to mail
the paper check to his suppliers. He can
just scan the check and send it as
eCheck or give the details of the check
through the phone.
The additional benefit
offered by eCheck processing is safety
and security. The eCheck transaction
goes through lesser humans than the
paper check and therefore, makes the
consumer less susceptible to identity
theft.
How does an eCheck work?
1)
Notification
The customer should be notified by the
business that his check will be changed
to the electronic form. The customer
then receives a notification that has
all the details of the transaction.
2)
Collection and Conversion
The consumers check will be converted in
to the eCheck. The check will be scanned
and then its image will become the
eCheck. The company keeps the paper
check for up to 2 years as the receipt
for the payment.
3)
Processing
The eCheck will be processed by the ACH
network processor.
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