Many of our clients have had to stop collecting cash and paper checks, but they all ask the same question when we bring up the wide variety of digital payment options: paper checks vs. electronic checks what’s the difference?
In this blog, we will break it down and summarize the different options, all of which are available through your TransAct Merchant Services account.
We all know how a paper check works.
A customer or client receives an invoice, writes a physical, paper check (or issues and prints through QuickBooks®) and then mails it to the service or product supplier. The check is then hand delivered or travels through the US Post Office, over the next 1 to 7 days (or more.) When it is received, it has to be opened and processed; recorded and endorsed before it can be taken to the bank to be deposited.
As we know, during Covid-19 shut downs, non-essential businesses had to operate remotely. Mail started piling up over days and weeks until someone could get to the office to collect invoice payments and process them.
This leads to many clients requesting to set up the electronic check option in their TransAct account.
While it is an electronic payment, this is a bank transaction without wire fees, and much lower in cost than a credit card payment because there are no percentage based fees associated with the payment.
Electronic checks can also be called e-Checks, digital checks, EFT (electronic funds transfer), bank transfer* and bank payment*.
*These last two are not the same as a bank check which is a physical, paper check issued by a bank as requested by the account holder. This term is not typically used in the US and has been known to cause some confusion.
Electronic checks are also different from ACH – Automated Clearing House digital payments – which can also take several days to process, like a paper check might. Important to note, while TransAct does not assess a percentage based fee on an electronic check transaction, some merchant processors do charge a base fee AND a percentage of 0.5% to 1.5% on the amount paid.
Many companies have recently set up electronic check processing in the last three months to help continue to collect check payments and keep their credit card processing fees to a minimum. If you you want to learn more, set up a new account or need to activate this service in your TransAct Merchant Services account, please call, e-mail or contact us today.