Payment methods have evolved over time from bartering with items like puka shells and precious metals to today's electronic commerce payment vehicles. There are advantages and disadvantages of utilizing different payment vehicles. It depends on your type of business, and the services or goods you provide. Accepting e-checks is one such payment vehicle that can provide multiple benefits for some businesses.
e-Check Business Benefits
E-checks, which are commonly referred to as ACH payments, are one payment vehicle that provides some great benefits for many companies, such as:
- Much lower transaction processing rates versus credit card transactions.
- Ability to schedule future recurring payments.
- Greatly reduced returned item fees versus paper checks.
- More timely deposits and distributions.
Is the business comfortable accepting paper checks for products and services delivered? If the answer is "yes", then this company is likely to benefit from accepting e-checks. For some companies, the guarantee of reserved funds availability from credit card payments is paramount. For those businesses that know their customers or have an on-going relationship, accepting payments via credit cards wastes money. Credit cards require an additional processing fee. On the other hand, E-check transactions are not subject to a discount fee (percentage of the transaction amount). Discount fees can add up to a significant amount of money. Reducing these fees will mean more profit.
Related: Get quotes from credit card processing service providers.
Managing e-Check Transactions Effectively
Once you have determined whether e-check payments could be of benefit to your business, it's time to explore how they are managed. This includes the processing tools and methods that transmit those payments through the ACH network and its operators like the Federal Reserve. Most importantly, security of sensitive data must be considered. The credit card industry has established PCI security standards for card transactions. However, e-checks running through the ACH Network are not subject to these stringent security standards. Ideally, a business will find an e-check provider whose processing platform utilizes the same security standards as credit card transactions. Processors like this maintain transmitted data within a PCI compliant processing system. They communicate live and return reference tokens, which replace the sensitive bank account data. These reference tokens are then used for future e-check transactions, eliminating the need for the business to store and continually re-send sensitive data.
Big businesses often have specialized accounts receivables software. These businesses can integrate e-check payments into their platform using an API (application programming interface). Software companies can also benefit from adding e-check functionality to their accounting software. A good API should provide the business with all the features needed for managing e-check transactions, including:
- Originating single debits.
- Originating recurring debits.
- Originating refunds or credits.
- Sensitive data replaced by reference tokens.
- A variety of communication methods for development integration.
- Ancillary services like account verification and identity verification.
- A fully functional sandbox environment.
- Reporting and reconciliation data delivery.
- Dedicated staff for integration implementation.
Smaller businesses that do not use software specific to their business or industry should consider security standards just the same. Those businesses should look for an e-check processor who makes available software that is secure and replaces and truncates sensitive data. User permissions play a role in security as well. Look for an application that allows your business to configure your employees for different roles. For example, a worker in the accounting department might require the ability to view report data for reconciliation. However, they have no need to schedule new payments or create new customers. Their account privileges would be restricted.
Last but not least, service, support and stability of the processor are paramount when it comes to e-check processing. Look for an ACH processing provider who has a track record and longevity. Get references. Ask if the processor has redundancy for their systems and whether they have multiple geographically placed data centers. Once you've answered those questions it's time to start enjoying the many benefits that e-check payments can bring you and your business.
Author Bio: Gene is a 13 year veteran of the electronic payments industry and serves as the VP of Business Development at ACH Payments. He specializes in payments integration of application developments. Connect with ACH Payments on Twitter!
(Image: patpitchaya via freedigitalphotos.net)