There are many ways to process payments. From mobile apps to traditional merchant account terminals, there are multiple ways for your customers to pay. However, while many think of the physical terminals or scanner when thinking of “payment processing”, there are two terms that you must know for your business: e-check and ACH processing. They essentially do the same thing by processing payments. It is these similarities that confuse merchants, and cause them to overlook their options.
Both e-check (electronic check processing) and ACH (Automated Clearing House) move funds from one account to another. With ACH processing customers use their bank account information to submit payments in the same for as a debit (since both come from a checking account). With e-check processing, the check is changed to electronic form, and then submitted. While ACH processing is essentially quicker and more familiar, e-check processing relies on the old-standard for check verification with the bank: signature verification. This has been around for decades, and is often how banks can prove a stolen check from a legitimate check.
For many, e-check technology is the superior option. Not only is it better suited for those who accept payments from mail order customers, but also it has newer capabilities than ACH processing. These capabilities facilitate direct customer-controlled funds transfers over the internet while providing tools to help curb fraud. Fraud is a huge concern with all merchants, and any step that a merchant can take to combat the risk is sought after.
Even though e-check processing is advanced technologically and has superior fraud protection, some do choose the quicker, long-tested ACH processing method. ACH processing has been around since the 1970s, and has been the top choice for many merchants ever since. The quick processing time is the biggest reason merchants choose this option, and once merchants get used to the quick turnaround, it can be tough to even consider choosing another processing method. The pros and cons must be weighed by any merchant, and while e-check looks to be the better option for many, it may not be the best option for you, especially if you are in need of a quick payment turnaround. Many weight the quick turnaround time with security, and this can be a huge struggle for many.