Accepting eChecks is a great way to add variety to the payment options available to your customers. However, processing eChecks on your own can be a questionable choice for several reasons. Here, we’ll discuss the benefits of using an eCheck processing company instead of doing it on your own.
Why eCheck Processing Can Be a Challenge
When a small business decides to process eChecks on their own, they will face a host of challenges in doing so. Those risks include:
- Increased return rates on checks
- Lost revenue due to returned checks
- Higher risk of fraud
- Difficulty verifying bank account information
Using an eCheck processing company can mitigate many of these risks and make your business more profitable.
What is eCheck Processing?
eCheck processing is a service that is offered to merchants by third party payment processors. It allows eChecks to be verified and processed for payment while reducing the risk associated with this type of transaction. These verification services occur in real-time, which is an easy way to verify that bank accounts are open, in good standing, and have sufficient funds to complete the purchase.
This type of service greatly increases the chances that the check will clear, and the merchant will get paid. It is generally completed through the verification of checking account information during the transaction process. It is conducted in real-time and takes only a few moments.
Benefits of Using an eCheck Processing Company
Instead of facing the headaches and higher risks by going it alone, consider the benefits of using an eCheck processing company.
Monitor transaction types – An eCheck processor can mix the transaction types to keep your merchant account open. Many banks will shutdown an account that has too many fees or high-risk eCheck transactions. An eCheck processor has systems in place to monitor this and decrease the risk of your account being frozen.
Reduce the number of returned checks – When a check is returned, it can be for a variety of reasons including chargebacks, insufficient funds, or incorrect accounting / routing numbers. Regardless of the issue, the bank will consider the merchant to be at fault for such issues. An eCheck processing company
can help by verifying accounts and reducing the risk of returned checks.
Check verification – eCheck processors have access to databases that merchants cannot see. This allows them to review accounts with a history of NSFs and returned checks. It also allows them to verify if the account numbers, addresses, and contact info match, which helps reduce risk for the merchant.
Fraud Screening – One of the major components of an eCheck service and what they can provide is fraud screening. Just like with credit card processing, eCheck processing needs frau prevention and screening. If you’re a small business with an expertise in something other than payment processing, it just makes sense to leave this to the experts.
If you’re looking for an online eCheck processing company, here are some of the fraud prevention features to ask about:
- Velocity: The processor should establish daily and hourly limits on the number of transactions allowed, based on various parameters set by your merchant account provider or other involved entities.
2. Transaction monitoring: This feature automatically identifies suspicious transactions using learned criteria from several databases
3. IP address identification: The ability to isolate specific IP addresses, regions, or known fraudsters’ IP locations, which helps reduce fraudulent transactions from being processed
4. Shipping verification: A process that verifies and compares the shipping address with the order IP address
If your business doesn’t have the ability to conduct all these searches, comparisons, and fraud reduction processes, you should consider getting an eCheck processor.
Final Thoughts
Using an eCheck processor is a great way to decrease your risks associated with eCheck transactions. It can help you focus on your business while the processor focuses on processing payments for you. The more you reduce your risks in payment processing, the more profitable you’re able to be.