ACH and eCheck Payments

What's ACH?

ACH, or Automated Clearing House, is the technology that processes electronic financial transactions between all banking and financial institutions throughout the U.S. and is governed by Nacha. Within the network, ACH payments are composed of two electronic payment types: ACH debit (e.g., bill payments) and ACH credit (e.g., direct deposits such as refunds, government benefits and more). 

These payments originated in the late ‘60s as a response to bankers' concerns that previous technology wouldn't be able to keep pace with the volume of paper checks being processed. Eventually, the network was developed to more efficiently process paper checks using the account and routing numbers. By 2001, ACH payments had expanded to the internet (WEB) and phone (TEL), enabling consumers and businesses to pay bills and make other payments electronically.

For ACH processing, the merchant requests written, electronic or verbal authorization from the customer. The submission is then converted into an ACH transaction via the payment gateway and then goes to the merchant's payment processor. Once complete, the transaction is sent to the customer's bank, and funds are withdrawn in three to five business days. 

What's an eCheck?

Electronic checks, or eChecks, are a digital version of a paper check that is initiated by a bank transfer. eChecks use ACH processing, and they are often referred to as ACH debits, meaning they only function to “pull” funds from a customer’s bank account. The ACH network facilitates the payment processing between banks and financial institutions. With eChecks, payments are processed faster than physical checks. However, like ACH payments, eChecks still require the bank account's routing and account numbers in addition to the customer's authorization. 

This authorization can be done over the phone, with a signed form or a completed online payment form. Once payments are authorized, set up, completed and submitted, they're withdrawn from the customer's account and then deposited into the merchant's bank account within three to five business days from the start of the process.

Now that we've highlighted the differences and similarities, it's time to start the ball rolling. Contact REPAY today to learn which option is best for your business and customers. 

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