What Is an eCheck & How Does It Work? Here’s Everything You Need to Know

What Is an eCheck & How Does It Work? Here’s Everything You Need to Know

17 February, 2021
5 mins
Brett Johnson, AVP, Global Enablement

Table of Content

Key Takeaways
What Is an eCheck?
How Does an eCheck Work?
How Does eCheck Payment Processing Work?
Final Thoughts

Key Takeaways

  • An eCheck, also known as an electronic check, is essentially the digital version of a paper check.
  • eChecks work by electronically withdrawing money from the payer’s account, transmitting it through the ACH network, and depositing it into the payee’s account.
  • Leveraging eChecks streamlines transactions, enhances security, and expedites financial operations.


An eCheck, short for ‘electronic check,’ represents the digital evolution of the traditional paper check payment method. This payment method has streamlined the process of monetary transactions in the digital world.

Functioning as a secure and efficient electronic alternative to conventional paper-based checks, eChecks empower individuals and businesses to electronically transfer funds. They replicate the functions of traditional checks without the need for paper, ink, or physical transportation.

Leveraging eChecks optimizes your financial operations, enhancing their discoverability and efficiency for both payers and payees.

In this article, we will explore what eChecks are, and how they simplify life for both payers and payees. Additionally, we will share a few advantages they bring to the financial landscape.


What Is an eCheck?

An eCheck, or electronic check, is like a digital version of a paper check. It’s a way to pay from your checking account without paper. Instead of a paper check, you share your bank details and payment info using a form. This gets your payment ready to go electronically.

eChecks play a pivotal role by modernizing payment methods, replacing paper checks with efficient digital transactions, enhancing financial accessibility and speed. This transformation streamlines interactions for individuals and businesses alike.

Recommended Reading: 5 Reasons Why SMBs Need Digital Payments in 2023 and Beyond

How are eChecks different from paper checks?

In the financial landscape, you’ll often come across two terms: eChecks and paper checks. In both methods, money is directly drawn from the payer’s account and deposited into the payee’s account.

Read on to learn more about both of these terms.

eChecks and paper checks differ from each other in the method of transaction. While eChecks are digital and involve sharing payment details electronically, paper checks are physical documents filled out by hand. 

Recommended Reading: 5 Hidden Facts About Paper Checks That Harm Your Business

eChecks streamline processes with speed and convenience, whereas paper checks require manual handling and processing. Still, some people prefer using paper checks because of the familiarity with them. 

Both these payment methods can coexist with each other and can be used depending on the convenience of the payee. 

Let’s take a look at an overview of the differences between eChecks vs paper checks:

eChecks Paper Checks
Sent and received electronically, its data is stored within a computer system. A personalized piece of paper in a book format with issuer and user info.
Secure with multi-layered protection. Carry risk of theft or loss.
Low user charges, minimal printing costs, transit costs. Involves printing, handling, and transit costs.
Can be transferred instantly. Paper checks take longer due to courier and banks.
No need to carry anything. Need to carry the checkbook.

How Does an eCheck Work?

Just as the name suggests, eChecks, or electronic checks are processed electronically. Money is electronically withdrawn from the payer’s checking account, transmitted via the ACH (Automated Clearing House) network, and deposited into the payee’s checking account. 

E-checks reach their destination faster compared to traditional paper checks, as paper checks involve added logistical steps for successful payment. With paper checks, the recipient’s bank verifies the check and then sends it to the originating bank for verification and this process normally takes time to complete. 

E-check processing is swifter, but it relies on the same information. The person initiating the electronic check payment must provide their bank routing number, account number, email address, and authorization.

How Does eCheck Payment Processing Work?

Processing an electronic check involves four key steps:


Step 1 – Obtain authorization: Before a transaction can proceed, the company needs permission from the customer. This can happen through an online payment form, a signed order form, or even over the phone.

Step 2 – Payment setup: After receiving approval, the company enters payment details into its online payment processing software.

Step 3 – Finalize and submit: The company saves or submits the payment details in the software. This marks the beginning of the ACH transaction process.

Step 4 – Confirmation and depositing funds: The payment is automatically taken from the customer’s bank account. The online system then provides the customer with a payment receipt, and the payment amount is deposited into the company’s bank account. 

Typically, within one to three business days after initiating the ACH transaction, the funds arrive in the merchant’s bank account.

And that’s how businesses get paid using eChecks.

Overview of the benefits of eChecks and paper checks


  • Convenient digital transactions with wide-reaching possibilities 
  • Targeted payments with specific details for diverse needs 
  • Precise monitoring of transaction history and improved financial processes 
  • Cost-effective alternative to traditional paper checks 
  • Ideal for modern payment environments and efficiency-focused operations

Paper checks

  • Perfect for local transactions and specific audiences 
  • A vital component of a comprehensive payment strategy 
  • Appeals to individuals less familiar with digital transactions 
  • Strengthens brand recognition through tangible interactions

By weighing the benefits of eChecks and paper checks, you can better understand which payment method suits your needs. The good news is, you don’t have to choose just one – you can leverage both the payment options.

When making your decision, take into account your transaction goals, audience preferences, digital literacy, and your operational budget. With the right choice, you’ll optimize your financial processes and provide seamless payment experiences.

Final Thoughts

Let’s reiterate: Neither eChecks nor paper checks are better than the other—it depends on your customer’s preferences. But eChecks offer a streamlined path to secure digital transactions.

eChecks bring the paper check into the digital era, revolutionizing the traditional deposit process. Where paper check deposits once involved a lengthy back-and-forth of verification and authentication, the eCheck payment method streamlines this for all parties involved.

Customers can pay more easily, businesses receive their money more quickly, and much of the bank authentication is automated.

Understanding the distinct benefits of both methods empowers you to tailor your payment strategy, ensuring seamless financial operations, enhanced security, and alignment with your audience’s preferences.



1). How to send an eCheck?

To send an eCheck, you’ll need to follow these steps:

  1. Enroll in an eCheck Service: Sign up for an eCheck service offered by your bank or a payment processor.
  2. Provide Payment Details: Input the necessary payment information, including the recipient’s account details and the payment amount.
  3. Authorize the Payment: Give your authorization for the eCheck transaction. This could involve an online form, a signed agreement, or an electronic confirmation.
  4. Submit the eCheck: Once authorized, submit the eCheck for processing. The payment will be electronically withdrawn from your account and sent to the recipient.

By following these steps, you can easily send an eCheck for secure and efficient digital transactions.

2). How do I accept an eCheck?

Follow these steps to accept eCheck payments:

  1. Setup ACH Merchant Account: Establish an ACH merchant account to directly withdraw payments from customers’ bank accounts. Provide your federal tax ID, years in business, and estimated processing volume. Approval may take a few days.
  2. Get Customer Authorization: Similar to signing a paper check, customers must authorize eCheck withdrawals. They can do this via contract, order form, or online payment form submission.
  3. Payment Details Setup: Customers input checking account, routing number, payment amount, and payment frequency (one-time or recurring) in an online payment form.
  4. Submit Payment Information: Trigger the transaction by clicking “save” or “submit” in your payment processing software.

3). Are electronic checks safe?

Yes, eChecks are a secure and convenient way to pay online, and they offer the same level of security as traditional paper checks.

4). How do banks verify eChecks?

Banks verify eChecks by following these steps:

1: The bank reviews the eCheck transaction details, including the payer’s account information, payment amount, and authorization.

2: It checks if the payer’s account has sufficient funds to cover the payment.

3: The bank then validates the routing number to ensure it corresponds to a legitimate financial institution.

4: The bank confirms that the payer’s account is valid and active.

5: Banks employ various security measures to detect and prevent fraud, ensuring the authenticity of the eCheck.

6: The eCheck is processed through the Automated Clearing House (ACH) network, which facilitates secure fund transfer.

By rigorously following these steps, banks ensure the legitimacy and security of eCheck transactions.

5). What’s the difference between ACH and eChecks?

While eChecks are typically single payments, ACH payments are frequently employed for recurring transactions, direct deposits, and significant transfers.

6). What’s the difference between eChecks and credit card payments?

eChecks take money from bank accounts, using routing and account numbers, while credit card payments use card details for instant transactions.

7). Do eChecks process on weekends?

 No, eChecks are not processed on weekends or federal holidays. Since eChecks rely on ACH processing, they don’t happen on weekends or holidays. If you deposit an eCheck on Tuesday, you might get the money by Thursday. But if you deposit it on a Friday before a bank holiday, it might take a couple of days for the funds to show up.

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