eCheck Best Practices for Small Business Owners
There’s been a lot of buzz surrounding eChecks lately. And it’s easy to understand why. For small businesses, they’re fast, secure, affordable, and can increase your sales. Simply put, accepting eChecks is a win-win for your business. But, that’s also only if you follow these eCheck best practices as well.
Use your bank or existing payment platform.
This just makes your life easier. When your current bank or payment platform processes eChecks, it guarantees that you’ll be working with a reputable and secure processor. Even more, you’ll probably obtain a lower rate since you’re already doing business with them.
Another perk of using your bank for processing eChecks is that it can increase your “float limits.” This is simply how much money you’re allowed to move each day or month. This is because you can transfer funds from another account, like your savings, to avoid any insufficient fund fees when there’s a processing delay.
Find a solution which meets your current and future needs.
Regardless if your bank or payment platform processes eChecks, it should meet your current and future needs. You can start by looking for a solution that is:
- A multi-user platform.
- Compatible with PCI Security Standards.
- Fully automated so that you don’t have to manually intervene.
- Easy to setup and use.
- Known for solid and reliable customer support.
- Known for favorable pricing plans so that you get the most bang for your buck.
There are also additional features that you may need for your specific business. For example, if you’re a retailer you may want a solution that allows you to accept eChecks via online, point-of-sale, and telephone. For subscription-based businesses, you would want a platform that supports recurring payments.
Here’s a list of the top 101 eCheck companies to get you started.
Import, don’t input.
There will be times when you’ll be asked to create ACH transactions. This could be for direct deposit for employees, collections from customers, payments to vendors and governmental agencies, and consolidating funds between various accounts in different banks.
Don’t retype this information into a processor’s web portal or anywhere else. This way you won’t make any mistakes or errors. Instead, use software like ACH Universal where you simply “point and click” to import this data.
Enable one-time ACH payments.
Even though recurring ACH-payments are popular, customers actually prefer one-time ACH payments. As our friends over at BluePay explain, “One-time ACH payments provide users with much greater control over their finances.”
“Think about a typical consumer who signs up for a subscription-based service like cable television, mobile phone coverage or utility bills. Although payments happen on a regular basis (month after month), the exact amount of each bill varies based on usage.”
One example would be your electric bill. Last month it was $160, but this month it dropped to $145.
Since these bills can fluctuate, “many consumers want the ability to inspect their bills before paying them.” The reason? They want to make sure that there aren’t any mistakes or extra charges.
Another reason is the “perceived” security benefits of one-time payments.
“With ACH payments, vendors have direct access to consumers’ bank accounts. While credit card companies often provide fraud protection, banks won’t always cover losses in the event of hacking or theft. As a result, some consumers are uncomfortable with the idea of “autopilot” payments if there’s no buffer between vendors and sensitive financial data.”
Of course, regardless, if it’s a one-time or recurring payment, ACH payments are one of the most secure methods to transfer funds.
Safeguard your account.
Hopefully I don’t need to warn you about protecting your bank account. Remember, security threats from cyber-criminals are very real and can be detrimental to your business.
While eCheck processing is often more secure than processing a credit card, there are a couple of basic security measures you should take. After all, it’s better to be safe than sorry.
- Computer access. Limit access to the computers that you use for online banking activities. Additionally, you may want to also limit internet access to only banking sites.
- Email correspondence. Never open an email from an unfamiliar address. Even worse, never click on a hyperlink from those emails. It’s mostly a scam to steal your login information.
- Anti-Virus, Firewall and Anti-Spyware Protection. Install and update basic security software. Since most of this software has moved to the cloud, it should be updated automatically. Discuss your best options with a network or computer specialist.
- Account monitoring. You should review your account on a daily basis. If there’s any unusual activity, it should be reported immediately.
- Limit transactions. Fraudsters go big or go home. In other words, once they have a victim’s account information they’ll go on a spending spree. Setting transaction amounts can lessen the damage done.
Most importantly, however, only work with an eCheck company that adheres to PCI Security Standards.
Storing user data.
There are strict regulations when it comes to storing your user’s data. Since most small businesses don’t have the knowledge or resources to protect sensitive financial information. It’s best to work with a payment expert – like us at Due.
Not only are we PCI compliant with a certificate, we’re knowledgeable in the latest security practices. As such, you can rest assured that your data is safe with us. And, if you need any advice, we have a pretty awesome team to guide you along.
Educate your customers.
If your small business just started accepting eChecks, then you have to let them know the good news. Furthermore, you also need to educate them.
For starters, since you need their name, account type, account number, and routing number, you’ll have to verify them. This can be done by charging their account via two micro-deposits. Stripe, however, works with Plaid for instant verification.
Regardless, you need to inform and guide your customers through the verification process.
Also, don’t forget to educate clients on security best practices like phishing scams and your business’s eCheck policies. For example, make it clearly known that you won’t process transactions over a certain dollar amount due to security reasons.
Be aware of restrictions.
As noted by NerdWallet, transferring money from one bank account to another may be fast and convenient, there’s also some restrictions to be aware of.
- Amount limits. As mentioned above, there’s most likely a daily and monthly cap on how much money can be moved.
- Cut-off times. A transfer won’t be processed until the next business day if it’s after a specific time. So, if you received money on a Friday at 5pm, processing may not start until the following Monday.
- Fee for insufficient funds. What happens when you don’t have enough money in your account? You’ll probably get hit with a fee by your bank.
- Not often available for international transfers. If using ACH, your bank probably won’t allow consumer international transfers. If you have global customers, you’ll need to work with a company that can process international payments.
- Transfer limits for savings accounts. eCheck transfers fall under the general federal restrictions. As such, there are limits on the number of certain withdrawals and transfers from savings accounts to six per month.