When people think about paying for things they usually think about using either a credit card or cash. But actually, there are several other methods available which can provide the same benefits. One method that has remained consistent as one of the most reliable ways to make a payment over time has been electronic checks.
With advances in technology, we are now able to process payments that were previously only possible through using paper checks via manual processing. Now, electronic checking allows us to transfer funds directly from your customers bank account to yours without having to rely on the old-fashioned way.
Due to this innovation, many businesses have streamlined their payment processes. Consequently, they are now able to reduce and eliminate the number of paper check payments.
In addition, many businesses have found ways to increase their cash flow by using electronic payment processing versus other payment processing options. Which ultimately allows for greater flexibility for their customers in how they pay.
What Are Electronic Check Payments?
An electronic check, commonly referred to as an eCheck, is simply a digital representation of a paper-based check. Instead of writing and sending a physical paper check, customers provide the business with their bank account number and routing number for authorizing and processing electronic transfers.
Businesses looking at how electronic check payment’s function may notice how straightforward the processing of these transactions are. Payments are processed via the ACH network, which securely moves funds between banks.
Unlike the credit card transaction method, where funds are pulled from a customer’s credit card account, electronic checks pull funds directly from a customer’s bank account. Thereby, reducing overall processing fees while still offering a viable method for collecting payments from customers. Many businesses that accept electronic check payments find that it offers customers another viable payment option to traditional forms of payment.
How Electronic Check Payments Work
Although the way electronic checks work is similar to that of debit cards and credit cards, there are some key differences.
1. Customers Give Banking Information
At checkout, customers need to enter in their routing and account numbers. Account & routing numbers can often autofill from a saved profile or from a browser. This information makes it easy for customers to checkout quickly and easily by integrating the WooCommerce product into the checkout process for a smooth experience for the customer, merchant, and the bank.
2. ACH Processes Payments
ACH is the network that transfers money between banks. Transfers can take some time to process and are not generally processed in real time. Nevertheless, it is still a secure, reliable and frequently used way of transferring funds electronically.
3. Transaction Will Initially Show as Pending
Transactions that are processed through the GMS eCheck will show up as pending. This allows merchants the opportunity to ship their orders immediately or hold off on shipping until the transaction has cleared.
4. Transaction Will Show as Approved After Processing Has Closed
Transactions will show as approved once they have completed their processing window and don’t generate an additional return transaction. Merchants can then run a traditional type of approval while mitigating any potential risk associated with the transaction.
Consumers must understand that ACH payments are subject to the same rules and regulations as traditionally issued checks by a financial institution. Therefore, may be subject to an electronic check being returned. Thus, negatively impacting both the merchant and consumer.
However, when merchants use a solution that validates the consumer’s banking information upfront, they are usually able to reduce their exposure to many common problems associated with the electronic check payment process.
Why Electronic Check Payments Are Beneficial
Companies benefit from using electronic check payments through improved cost efficiencies and payment flexibility.
Lower processing fees compared with credit card payments is one of the main benefits of using electronic checks. Since these payments are made directly from a customer’s bank account, their costs of processing are lower than credit cards. Thereby increasing the profit margin over the life of the business.
For retail, electronic checks provide customers with the option of a reliable method of payment when they choose not to use credit cards. Most importantly, it’s key in certain industries where customers wish to have greater control over the way payments are made.
Simplicity is a benefit. Customers don’t need to be logged into their banking accounts or authenticated through a 3rd party. Unlike other solutions that offer additional layers of login, echeck will allow customers to check out much more quickly than other options.
GMS eCheck vs Plaid Solutions
Company use of electronic checks can be compared against the more traditional method for payment, such as ACH. While both methods involve payment from the customer’s bank account, they do so in a vastly different manner. Also, different in the way each works adds different levels of friction to the checkout process.
Plaid requires the consumer to login to their bank account using a third-party interface. Presently, this adds additional friction to the checkout process causing some users to abandon the transaction. Additionally, it incurs additional costs to authorize and validate, increasing the overall cost of the transaction.
Why GMS eCheck Provides a Simpler Approach
GMS eCheck system takes a unique approach to payment processing by eliminating the need for a customer to log into their bank to make a payment. Instead, they give the ability to enter routing and account numbers directly at the point of purchase. Resulting, this is a much more straightforward way of completing an online transaction for those consumers who prefer to use traditional payment methods.
Most Plaid based payment solutions utilize the ACH payments system in the background, but they try to position themselves as a more high-tech alternative to only ACH. However, while they may allow users to view their account balances at the time of payment, they do not guarantee that those payments will clear and they can and will reverse for many reasons.
Our eCheck solution provides businesses with a comprehensive solution to both validate their customers’ accounts and managing risk by using the ACH payment system. By validating their customers’ account information prior to completing transactions and implementing a pending and approved transaction cycle, businesses now have more control over their payment processing while also eliminating unnecessary complexity.
How Electronic Check Payments Improve Business Operations
Electronic checks are an increasingly popular way for businesses to operate more efficiently and flexibly. They provide an additional payment option while simplifying internal processes and decision-making.
- Offering echeck payment methods provides additional options to accept payment for some businesses
- Echecks reduce the amount of administrative work associated with payments and increase the ability to monitor and track payments
- Businesses can establish order fulfillment procedures to meet the criteria for risk tolerance
By creating a digital record of every transaction, echecks simplify how businesses report and reconcile their transactions, especially when using integrated eCommerce platforms such as WooCommerce.
Other businesses can maintain control over whether they immediately fulfil an order or not until the payment has been fully approved. Therefore, they will have more control over providing a positive customer experience while protecting their finances against loss of revenue.
Why Partner with Gulf Management Systems for Electronic Check Payments
Working with an experienced and reputable provider is critical when adopting an electronic check payment solution. GMS has developed a custom eCheck solution that is integrated into today’s most popular platforms like WooCommerce.
Gulf Management Systems has also created an additional layer of security through account-validation features, which reduce the number of administrative errors due to either closed or invalid bank accounts. We allow businesses to manage their payments and have visibility and control.
But we don’t just stop there. Moreover to eCheck solutions, we provide a full suite of payment solutions to accommodate businesses that are growing.
- Credit Card Processing
- ACH
- POS Systems
- Mobile Payment Systems
- Virtual Terminals
- Direct Deposit
- Merchant Services
Gulf Management Systems helps create an efficient, scalable payment system to manage long-term success. Get started today!
