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How Does Electronic Check Processing Work?

In days gone by, writing checks took several days. Not only did the merchant have to accept the check, but then had to wait for the check to clear through a bank and be verified as being good. While this system worked for many years, technology eventually took over. Much like credit card processing, electronic check processing has made the process not only easier for businesses with merchant accounts, but also more reliable and efficient.

Electronic check processing’s main advantage to businesses has been allowing them to get paid faster while having almost instantaneous verification as to if the customer has adequate funds to cover the amount of the check. Once a customer writes the check, the sales clerk then runs the check through a reader that captures such information as check number, account number, and the routing number of the customer’s bank. By then entering information directly related to the merchant, permission is then sought to complete an electronic payment from the specified account.

Based on the specifics of the merchant accounts agreement, the check can then be guaranteed by the provider on the spot, ensuring the business will get paid. This usually occurs within 48 hours, when the funds are deposited into the merchant’s account. Most merchants keep the paper check given to them by the customer, but others void it and return it to the customer once the transaction is completed.

Electronic check processing offers numerous benefits to businesses. Perhaps the most important is it speeds up the deposit process by eliminating the need to take checks to the bank. It also reduces the risk of checks being lost or stolen prior to being deposited, and also makes check processing virtually as safe as credit card processing. As an added bonus, most payment providers offer merchants online access to account activity, letting them coordinate record keeping and centralize their funds into one main account if desired.

To entice more business owners to use electronic check processing, many payment providers offer incentives designed to make the process as easy as possible. Reimbursements for returned checks, multi-check acceptance, check verification and business check conversion are some of the ways providers help business owners make the move to electronic check processing. These programs can be tailored to virtually any business, so taking time to research exactly what is needed by a business will result in having only the services deemed necessary.


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