An eCheck, or electronic check, is just the modern version of traditional paper checks. Instead of manually writing out a check and mailing it, eChecks allow consumers to transfer funds from their bank to your business’s bank through the Federal Reserve Bank’s ACH Network. Since eChecks are processed electronically, they’re often faster and more secure than paper checks. But, that’s just the beginning. Here are the top ten reasons why eChecks make good business sense.
1. Consumers still have bank accounts.
It’s true. In fact, there’s still plenty of reasons for people to having some personal checks laying around. They avoid convenience fees, provide old-school security, and offer an offline payment options since 13 percent of U.S. adults don’t use the internet.
Additionally, they’re perfect for making specific transactions, like paying rent to your landlord.
But what if you don’t have paper checks or use a local bank? There are still plenty of online banks that offer the same advantages, along with some other advantages like automating your savings. One example is Chime, which just secured $18 billion in Series B funding.
Simply put, consumers still have a need for bank accounts. So why not use that to your advantage?
2. ACH is one the rise.
Even though there’s a need for bank accounts, paper checks have still be on the decline. From 2000 to 2012, paper check usage declined by more than 50 percent. While credit and debit cards obviously benefited from this, so did ACH.
It’s been a slow process, but during this same period ACH increased from just 11 percent to 18 percent. NACHA, the Electronic Payments Association, reported that ACH amounted to over 25 billion in transactions and $43 trillion in value in 2016. That was an increase of 5.1 percent compared to 2015.
“2016 marked a significant year for the continued evolution and growth of the ACH Network,” said Janet O. Estep, president and CEO of NACHA. “With the implementation of Same Day ACH, we have added to the robust capabilities of the Network, now enabling not only next-day payment capabilities, but same-day capabilities as well.”
“The added attribute of speed provides additional flexibility and options to a system that has the capacity to process credit and debit transactions, payments and robust information together, domestic and international transactions, business and consumer payments, and more. And it is this versatility that makes ACH payments a valued payment type, and supports the continued growth of the ACH Network.”
Because of the flexibility and the technical advancements of the ACH Network, don’t expect this growth to slow down.
3. Cost of processing.
Did you know that U.S. businesses still pay half of their bills by check? That’s what a September 2014 survey by the Association for Financial Professionals found.
AS noted in this WSJ article, Bank of America estimates that the cost of writing a business check is between $4 and $20. That’s because you have to factor postage, check stock, envelopes, printer supplies, and time invested.
Considering that ACH transfers cost next to nothing, in some cases fees could range from 15 cents to $10, this switch could save you a ton of money. Ultimately, ACH save both you and your customers money.
Fraud should be a serious concern for business owners of all sizes. After all, businesses who get attacked not only lose money, it also puts your business in jeopardy.
The good news? ACH and eChecks are a safe way to pay. This is because it uses state-of-the-art technology like encryption and tokenization to prevent fraud and data theft. With Secure Vault Payments (SVP) users can initiate ACH transactions without sharing sensitive financial data with recipients.
For businesses, this reduces the chances of receiving a bad payment or being hit with a chargeback. For customers they can be certain that their payment information will remain secure.
5. Speed and tracking.
ACH payment can dramatically reduce the time in which the payer and payee can access fund. That’s because money can be transferred now within a day. Without that payment lag time, you can rest assured that you’ll always have positive cash flow.
Furthermore, you can easily track payments since everything is done electronically. If you’re not able to track the inflow and outflow of cash through an app or website, then you should at least be able to receive an email summary on a weekly basis.
When you have this kind of access to current and accurate data, you can make more informed business decisions.
6. Cash flow and access to funds.
Managing cash flow is paramount when running a business. As such, any delay in access to your funds could make or break your business. Instead of waiting between 7-10 days for a paper check, you can receive an eCheck in under 24 hours.
When you need to access those funds to pay your expenses, every day counts. In other words, eChecks allow you to have better control of funds coming in and out.
7. Recurring payments.
Let’s say that you have a business that is subscription-based or relies on memberships. Then you can set-up recurring eCheck payments so that you have a more efficient payment method.
Bank accounts, unlike credit card numbers, rarely change. This means you don’t have to be concerned with losing customers or payment gaps. Again, eChecks are also more cost-effective since they don’t come with monthly fees or expensive transaction fees.
8. Increase sales.
Since paper checks aren’t officially extent, eChecks are an effective way to transition from paper checks to electronic checks. Even if you don’t accept paper checks, eChecks are an additional payment method that customers may prefer.
Even better, your business can process international and out-of-state checks just be using account validation and customer authentication processes. This will protect your business from any chances of fraud.
9. No transactions limits.
Does your business accept larger ticket items? If so, eChecks are a perfect payment solution. This is because there no limits to transaction amounts.
10. It’s better for the environment.
Finally, eChecks reduce the more than 67.4 million gallons of fuel used and 3.6 million tons of greenhouse gas emissions that transporting paper checks create. Considering more and more customers are becoming socially conscience, this is a way to show that your business cares about making the world better.