What is an eCheck?
You may have noticed that we discuss both ACH and eCheck processing and payments around here. It’s all over our blog and website. ACH. eCheck. Electronic checks. What’s the difference, exactly?
Let’s jump in.
There actually isn’t much of a difference between the two. In fact, you can use the terms interchangeably and be pretty safe in the industry.
ACH stands for the Automated Clearing House and is basically the process of moving funds electronically between bank accounts. ACH processing can also be called EFT (electronic funds transfer), not to confuse you further. To learn more about ACH/EFT processing, read our Payments Basic post here.
Now, an eCheck (which is just the abbreviated term for electronic check), is pretty much the same thing. Technically, you might consider the actual eCheck the payment itself, rather than the process. So the term eCheck might really be more synonymous with the term “ACH payment,” to be most accurate. Think of the eCheck as the electronic check payment that replaces what used to be the paper check.
How do you write an eCheck?
What is the difference between ACH credit and Debit?
With ACH processing, you use your bank account information to process payments. It can also signify a credit to an account (like a payroll direct deposit, for example). There’s no rule you always have to pay someone money out of the account. Money can also go into a bank account.
This might happen when you pay, let’s say, your rent online. A lot of us do this nowadays because it’s infinitely more convenient than trying to cram that check into that tiny slot in the middle of the night. So you go to your desktop and log on to your property management company’s website. You get to the payment area, and what are you prompted to do? Enter your routing and account number.
Anytime you’re asked to enter these numbers for an electronic payment, you’re about to make an ACH or eCheck payment.
Another way people make eChecks? Many times, when we pay bills and submit paper checks, they are actually converted to electronic checks and submitted and processed as ACH.
What happens when I choose to pay using ACH instead of credit cards?
When you choose ACH, you authorize a debit to your checking or savings account by an ACH transaction. The Automated Clearing House (ACH) is a funds transfer system governed by the Rules of the National Automated Clearing House Association (NACHA) which provides for the interbank clearing of electronic entries for participating financial institutions.
How is ACH different from other payment methods?
ACH transactions are transmitted electronically between financial institutions through data transmission. ACH provides faster processing than paper checks by eliminating physical handling. ACH provides more economical processing than credit cards, which may carry convenience fees and finance charges.
How does ACH work?
By entering the required banking information, you authorize a debit to your checking or savings account for the amount you specify, for a single occurrence. This is the Commonwealth’s preferred method of payment.
How do I know the ACH transaction was successfully processed?
After submitting your payment, you will see a confirmation screen indicating that your request for payment was accepted. Print and retain this important information until the transaction is processed and settled. In addition, the confirmation number, contact information and an acknowledgement will be sent to the email address you entered as part of the payment transaction. Finally, the ACH transaction will appear on your bank statement.
How are ACH credits handled? What if I entered the wrong amount?
Contact the Commonwealth of Massachusetts department you are paying to request a void or refund. You will be asked for information contained in your confirmation email to reference the transaction, so be sure to keep this important information.
NACHA, the not-for-profit association that manages the ACH network, advises consumers to treat these numbers as “sensitive information” and to “safeguard them just like a Social Security Number.” This is not an issue with ACH credits, since when you send money from your account, you do not need to give your account number to anyone.
That said, while ACH fraud does occur, it’s also very rare. According to NACHA data, fewer than 3 out of every 10,000 ACH transactions are rejected because a consumer said the transaction was not authorized.
So what should you do when an ACH debit is the most convenient payment option? It matters who is on the other end of the transaction.