What is Electronic Check? Difference Between Electronic Check and Paper Check:
Electronic Check is an upgraded version of paper check. When a person wants to pay the bill amount to merchant, s/he usually prefer to pay by check. Paper Check is the safest way to pay money from one bank account to another. But it takes time which is two-three working days, sometimes the paper check takes more than five days to clear in bank.
Paper Check gets cleared faster if the payer and payee belong to same bank. The payer need to give/send the check to payee and the payee has to deposit the same in his/her bank. In order to get rid of all these troubles, banks have introduced Electronic Check which is also known as E-Check. It takes much less time to get cleared and the amount is soon deposited into payee’s bank account.
What is Electronic Check?
Electronic Check is an online form of payment where the money is deducted from payer’s account and directly deposited into payee’s account. The money transfer transaction is processed online by bank through Automated Clearing House (ACH). If you wish to send and receive money without any hassle then you should use Electronic Check (E-Check) Service provided by your bank.
The concept of electronic check is arisen from the high need of faster payments. Many people use their checkbook for secure merchant payments. The paper checks take longer time which both the payer and payee don’t like. That’s why electronic check is discovered to eliminate the hassle and complete the fund transfer process as fast as possible.
How to Send Electronic Check to Payee
The customer (payer) needs to send the paper check by mail to the merchant’s address. But in electronic check, there is no need to mail it. The customer can send the e-Check by two different ways mentioned below:
- Payee sends Online Payment Form to Payer and Payer fills it up and returns the same to payee. The payer has to provide his/her Account Number, Check Number, Routing Number and other details.
- Payer and Payee have conversation on a recorded phone line where payee is asking all required details including payment amount. The payer is giving all information and consent to debit the said amount from his/her bank account.
How Electronic Check Works (Step by Step E-Check Process)
Electronic Check works very fast than the paper check. The merchant must have been registered on ACH Merchant Account to receive payment through electronic check. The process of electronic check goes through five simple steps as mentioned below:
01. Authorization from Customer or Payer
The merchant (payee) has to obtain authorization from customer (payee) to receive money online using electronic check. In order to get this authorization, the merchant must have customer’s online payment form or signed order form. The conversation between merchant of customer over phone can also be used as a valid authorization from customer.
02. Setting up the Payment
The merchant has to input payment information into online payment processing software to set up payment. In case the payment is recurring type, the merchant must provide recurring date or schedule along with payment information. This payment setting up process must be done after the authorization is successfully taken from the customer.
03. Finalization and Online Submission
The payment information must be properly entered into payment processing software. Thereafter the merchant should check the payment information i.e. Account Number, Check Number, Routing Number and other details. Finally s/he should save and submit the payment details into relevant software. The online payment and fund transfer process will start only after submission of payment information.
04. Payment Confirmation and Online Processing
After submission of all required details, the online processing will begin. When all the details are matched in cross verification, the money will be deducted from customer’s bank account. The ACH Online Transaction will be completed by sending the payment receipt to the customer.
05. Fund Deposition into Merchant (Payee)’s Account
The Fund Deposition Process is initiated right after the payment is deducted from customer’s account. However the actual deposition of fund takes time to show effect into merchant’s bank account. Once the ACH Transaction is initiated and payment is confirmed, the relevant fund will be deposited into merchant’s bank account within three to five working days.
Difference Between Electronic Check and Paper Check
Electronic Check is different in many ways from the traditional paper check. Here we provide some basic differences between Electronic Check and Paper Check as follows:
|Feature Name||Paper Check||Electronic Check|
|Definition||It is a non-cash form of payment to credit the money directly into payee’s checking account.||It is an electronic way of payment of credit the money directly into payee’s checking/bank account.|
|Other Names||Paper Check is also known as Traditional Check, Standard Check and Regular Check.||Electronic Check is also known by its nickname as E-Check or e-Check.|
|Cost of Check||It is a part of Checkbook issued by bank. The bank deducts checkbook charges from your bank account.||It is an electronic form of check. Therefore it does not cost like paper check.|
|Clearing Time||Paper Check takes longer time to get cleared. It can be a little faster when the payer and payee belong to same bank.||Electronic Check also takes time in clearing. But it is faster than paper check because of electronic fund transfer process.|
|Clearing Period||Bank generally takes five to seven working days to clear the check and deposit the amount into payee’s checking account.||Bank usually takes three to five working days to clear the e-Check and show effect in payee’s bank account.|
|Error Chances||Paper check may have several errors like date, payee’s name, payer’s signature mismatch and others.||The chances of error in electronic check are must less than paper check. Because the details are entered online into payment processing software.|
Types of Payments through Electronic Check
You may want to know about the types of payment you can do using electronic check. Most people prefer electronic check for credit card bill payment and expensive items purchase. You can use electronic check for payment of gym fee, legal fee, house rent and car EMI or maintenance charges. If you are associated with a monthly/quarterly recurring payment, you can do it more easily with electronic check.
Thus, electronic check is better in many different ways than a paper check. You should contact your concerned bank branch to know more about e-Check and its importance.