Check Processing

What is an Electronic Check? The Ultimate Guide to eCheck Payments

Read Time: 7 min

While an electronic check might sound more like an 80’s rock band than a form of payment, there’s a lot to learn here. Chances are you’re familiar with the traditional check payment method, a staple dating back several hundreds of years. Traditionally, banks manually process checks and deposit the funds into the user’s bank. The funds sometimes take days to process and appear in the right account. Luckily, technology has come leaps and bounds since those days. Now, electronic checks allow these payments to be made electronically from a person’s checking account. There are many benefits for both parties when using the eCheck payment method.

But what is an electronic check?

What Is an Electronic Check?

An electronic check, or eCheck, is an electronic payment made from your checking account. Think of an electronic check as a virtual version of your paper check. When a customer uses an eCheck as their form of payment, the funds go to the merchant’s bank account through the Automated Clearing House (ACH) network.

man overseeing an eCheck payment on his computer

Merchants must have eCheck processing to enable these types of transactions.

How Does eCheck Processing Work?

Electronic check processing is a faster way to process payments than the traditional paper check method. The process is otherwise similar to paper checks. Switching to electronic check processing, allows businesses to process digital payments, saving time and reducing paper waste. There are a few main steps to processing an electronic check.

The Transaction Is Authorized

The first step to processing an eCheck transaction is that the business must obtain the customer’s authorization to take the funds from their account. This authorization can happen through the customer filling out a credit card authorization form, phone conversation, or a signed order form. Once authorization happens, the check information goes to the payment processor.

The payment goes through

After receiving authorization from the customer, the business can enter the payment information. This includes the customer’s bank routing number. This information goes into your online payment processing software. Here, you’ll also include recurring payment information if necessary. After entering the information into the software, the business will submit it to start the ACH payment process.

Funds appear

The payment is withdrawn automatically from the customer’s bank account. Then, the software generates a receipt and sends it to the customer. Funds should appear in the business’s bank account within three to five business days after initiating the ACH transaction. Since the funds are in the right place, this also marks the end of the electronic check process.

How Long Does It Take for an eCheck to Clear the Bank?

On average, it takes 3-5 business days for an electronic check to clear the bank. This means, once the initial transaction is initiated and verified, it will roughly take 3-5 days to clear and show up in your bank account. However, this is not the full picture when it comes to the complete eCheck processing time.

Generally speaking, the time it takes for an eCheck to be processed depends on the provider and issuing bank. Because there are several institutions involved, this processing time goes through multiple channels.

eCheck Estimated Completion

As mentioned, eCheck processing times are approximate as several factors need to be considered before giving an accurate timeline. Some of these factors include:

  • Your processor
  • The issuing bank/institution
  • Holidays
  • The time the transaction was initiated

With these factors in mind, it takes approximately 24-48 hours for the verification of an eCheck to take place following the transaction being initiated. This process is when the credentials are verified and the issuing bank is given the green light to withdraw the funds. From this point, it will take an additional 3-5 days for the electronic check to clear the bank. Once this takes place, the funds will be deposited in the appropriate bank account and the transaction is complete.

How to Pay with eCheck Online

Utilizing the power of eChecks to pay online is helpful for many reasons. For one, they minimize the cost of high volume payments and make recurring payments a breeze. But you may be asking how to pay with eCheck online if you’re a business owner.

Depending on who you’re looking to pay via electronic check, you will most likely receive some version of an invoice for the goods or services you’re paying for. On this eCheck invoice you will input your banking information. The most common information required includes:

  • Your name or business’s name (DBA)
  • The bank account number which will be drawn from
  • Applicable routing numbers
  • The name of the issuing bank

Once this information is delivered to the corresponding party, the online eCheck will be initiated. As mentioned before, this process can take up to 7 days with verification and bank clearing. This way of paying online via eCheck cuts down the use of credit cards and terminals, making payments more accessible for both parties.

What Types of Payments Can You Make with eChecks?

The most commonly used payment method in the United States is credit cards. But eChecks are also a popular method of payment. eCheck merchant processing fees are often lower than credit card processing fees, making it an attractive payment option. eCommerce and subscription or recurring revenue business models are the most common users of eCheck payments. However, almost any business that takes digital payments can benefit from accepting eCheck.


It is common to have eCheck as an accepted form of payment for an eCommerce website. Because eChecks allow merchants to process digital payments, there are customers who may prefer it over using a debit or credit card.

If a customer doesn’t have the sufficient funds to process a payment, the transaction simply won’t go through. You do not risk having to pay a return check fee. It’s a safer way to accept international transactions. There’s also no limit to the monetary amount that an eCheck can be for. If you run online stores that sell high-priced products, you can accept this method of payment more efficiently.

Subscription/recurring revenue

If your business is has a subscription-based or recurring revenue model, eChecks make an ideal form of payment.  These are also sometimes known as “recurring ACH payments.” It is common for property managers to request that tenants fill out a recurring eCheck rent payment form. This enables them to deduct rent automatically on a specific day each month from the tenant’s checking account.

Other common places that electronic checks work for recurring payments include the following.

  • Gym memberships
  • Mortgage payments
  • Credit card payments
  • Auto loan payments

How to Cash an eCheck

Because eChecks are essentially virtual versions of your traditional paper check, it’s easy to deposit them. Simply proceed as you would with any digital payment. The only difference from other online payments is that you’re requesting funds to be paid directly to your business bank account.

eCheck Deposits

If you’re wondering how to deposit an eCheck, you’re in the right place. While an eCheck deposit may sound counterintuitive, this process deserves an explanation.

eCheck deposits occur when a person or an organization takes the banking information provided to them and initiates an electronic payment. A transaction then takes place between the issuing bank and processor. Depending on the service your organization uses, an eCheck can be deposited via a secure electronic payment gateway. Here, the user inputs the information directly and submits for payment.

After a designated amount of time, the funds will be deposited into your account electronically. eCheck deposits are a faster and more secure form of digital payment than other virtual options out there.

Do ACH and EFT Fall Under Electronic Check Processing?

man on laptop processing an electronic check

The answer is yes, in essence. Both ACH and EFT payments are types of electronic payments. Electronic Funds Transfer, or EFT, is the process of moving funds from one bank to another electronically without involving bank employees. The transfer can happen entirely online without the need for paper money.

EFT is a broad term that includes many different types of electronic payments including wire transfers and ACH transfers. Because transactions occur entirely online, EFTs are also sometimes called ePayments. It would be more accurate to say that electronic check processing falls under EFT.

ACH payments, which are also known as electronic checks or eChecks, are a form of EFT payment. This method moves funds between accounts electronically without the need for stamps, envelopes, and checkbooks. The main difference is how ACH payments use a batch processing method. Transactions are usually handled one at a time with checks or wire transfers.

Are Electronic Checks Secure?

One of the key benefits of electronic checks is that they are a secure payment method. Data and security breaches are unfortunately a common occurrence in today’s world. However, electronic checks provide more security than using a physical check. This is because the use of eChecks eliminates the physical document from the transaction. There’s nothing that can be lost or stolen that can be used to commit fraud or identity theft.

The additional layers of authentication through the payment process adds layers of security that protect both parties. The encrypted data provides a secure online payment that you can feel confident in.

How to Get a Merchant Account for Electronic Check Payment Processing

In order to process electronic check payments, you will need a merchant account. This process is simple and identical to acquiring payment processing for credit card payments. However, if your business is considered high risk it is important to find a merchant provider who understands your industry. When approved, your merchant services provider will walk you through setting up eCheck payments for your business. And that’s it!

Securing electronic check payment processing for your business is a great way to provide alternative payment methods as well as security and high-ticket transactions. With the right processor, you’ll be processing eChecks in no time.