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How an eCheck Works

EChecks are a popular (low cost) method of transferring money online to either an individual or to pay for a service of some sort.  We give an overview of HOW the Echeck Process works here. Note the exact details will depend on the payment processor you utilize to make the payment. For example, your bank will have a different series of steps than will Paypal.

For more information about eChecks, please go to our Echeck Overview page.

The (General) Echeck Process

There are basically FOUR steps to how an echeck works.

1. Authorize It

Customers are notified that their paper checks will be processed. The customer must give permission, either in writing, via phone, or through an electronic form.

2. Enter Transaction Info

The following information is collected:

  • Bank Routing Number
  • Bank Account Number (usually a checking account)
  • Name Associated with Bank Account

Note, at some point you may only need to enter this info ONE TIME when linking your banking information to a payment gateway like Paypal. At other times, you may need to enter it for every transaction if you do not use a specific payment gateway.

3. Processing

The information is processed by the ACH network (or other check verification network) and the customer’s account is debited for the amount while the merchant’s account is credited.

4. Confirmation

Once the payment has been electronically debited, the payment will be visible under the customer’s bank account statement. The billing company name, the check number, and the amount will be visible.

ECheck Fees

The fees vary depending on your bank and the payment processor linked to your bank. If your bank offers some type of ECheck payment directly, there may be no fees to send outside of your bank account fees related to your specific account setup. Payment processors may charge their own varying fees for eCheck payments, though these tend to be significantly lower than other payment fees like Credit Card, Debit,  Wire Transfer, Email Money Transfer fees.

Typically, the fees range between .25 cents to $1.50 PER eCheck and are not (usually) percentage based on the transaction. For example, if the fee is .25c, you will pay $1000.25 per $1000 payment made with an eCheck. A credit card fee, on the other hand, may cost 2.9 percent. Making a $1000 payment via credit card online may cost you $1029 USD, significantly more than an eCheck payment.

If you want a breakdown of various methods of transferring money and the FEES associated with each type of payment method, read our Best Ways to Transfer Money to Individuals article and our Best Ways to Send Money Online.

Processing Time for EChecks

Typically it takes your bank about 24 hours to 48 hours to verify an eCheck. The payment gateway may add additional time. For example, PayPal gives between 5 and 7 business days for an eCheck payment to be verified.

As a rule of thumb, about 3 days to 5 days.

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