Paystand’s Guide to Understanding ACH and eCheck
How to Receive Direct Bank Payments Online Table of Contents
Do direct bank payments make sense for your business? 3
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PayStand’s Guide to Understanding ACH and eCheck Table of Contents Do direct bank payments make sense for your business?
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$Q\FRVWEHQHȴWDQDO\VLVRIDGRSWLQJGLUHFWEDQNSD\PHQWPHWKRGVVKRXOGRIFRXUVHLQFOXGHDQ\ XSIURQWFRVWVDQGVXEVFULSWLRQIHHV(YHU\YHQGRULVGLHUHQWDQGHPSOR\VDXQLTXHEXVLQHVV PRGHOIRUSURYLGLQJGLUHFWEDQNSD\PHQWVHUYLFHV(YHQZLWKWKHVHDGGHGFRVWVDGRSWLQJ$&+ DQGH&KHFNVWLOOEHDWVRXWFUHGLWFDUGPHUFKDQWIHHVE\DODUJHPDUJLQ PayStand’s Guide to UnderstandingDocument ACH and eCheck Name Pagepage 7 ΖV$FFHSWLQJH&KHFNV2QOLQH6HFXUH" 7KHH&KHFNV\VWHPZDVDUFKLWHFWHGWRH[FHHGHYHQWKHKLJKVWDQGDUGVIRURQOLQHFUHGLWFDUG SURFHVVLQJΖWOHYHUDJHVVWDWHRIWKHDUWFU\SWRJUDSK\DQGGLJLWDOVLJQDWXUHVWRHQVXUHWKHYDOLGLW\ RIHDFKWUDQVDFWLRQ%HORZDUHMXVWDIHZRIWKHVHFXULW\IHDWXUHVWKDWPDNHH&KHFNWKHPRVW VHFXUHRQOLQHSD\PHQWPHWKRG Authorization via Bank Login H&KHFNȇVVXSSRUWIRUDXWKRUL]DWLRQWKURXJK WKHFXVWRPHUȇVRQOLQHEDQNLQJORJLQDGGVD OD\HURIVHFXULW\QRWSUHVHQWLQ$&+ΖQVWHDGRI HQWHULQJWKHLUURXWLQJDQGDFFRXQWQXPEHUWKH SD\HUXVHVWKHLUIDPLOLDURQOLQHEDQNLQJORJLQWR DXWKRUL]HWKHWUDQVDFWLRQ2QO\WKHRZQHURIWKH DFFRXQWZRXOGNQRZWKLVORJLQVRPHUFKDQWV 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As you evaluate eCheck payment providers, you may want to consider some of these advanced capabilities and how they could improve your business. Online Banking Login This innovative feature, which adds a great deal of security to eCheck transactions. As we discussed above (“Is Accepting eChecks Online Secure”), allowing users to authorize an eCheck by entering their online banking login alleviates the need to expose their routing and account number. It’s also more convenient for users—whereas most people need to refer to a physical check to input their routing and account number, almost everyone knows their online banking login by heart. Recurring Payments Businesses with recurring revenue models can enable their customers to pay by eCheck on an automated monthly or annual basis. Property managers can modernize their systems and appeal 3D\6WDQGȇVFKHFNRXWHQDEOHVH&KHFNZLWKEDQNORJLQ to younger renters by accepting recurring monthly eChecks, eliminating delays due to mail delays and JHQHUDOIRUJHWIXOQHVV1RQSURȴWVZKRKDYHQHYHUWDNHQDQRQOLQHGRQDWLRQFDQVNLSWR the head of the line and start taking eChecks, avoiding the costly credit card fees that have hobbled online fundraising. Discounting at Checkout :LWKH&KHFNLWLVSRVVLEOHWRRHUDGLVFRXQWWRWKHFXVWRPHUDWFKHFNRXWSURYLGLQJDQ incentive to use that method over higher fee credit cards. This can be accomplished either by surcharging the credit card fees to the total (a practice largely believed to be illegal, but in fact just discouraged by—guess who—the credit card industry), or by applying a percentage discount to eCheck payments. As we saw in the chart on page 7, the cost savings that accumulate with eCheck transactions make it well worth merchants’ while to steer customers to that method. PayStand’s Guide to Understanding ACH and eCheck Page 9 $GYDQFHGH&KHFN)HDWXUHV(cont’d) Mobile Photo Check Capture Customers of larger banks may have tried this new technology for deposits, and now a few eCheck processors are integrating it to turn paper checks into eChecks. Merchants can now take a photo of a check with their smartphone, perform instant funds YHULȴFDWLRQDQGGHSRVLWLWWRWKHLUEDQN account within 48 hours, all without getting up from their chair. Support for new business models eCheck is highly optimized for online Merchants can now use their smartphones to turn paper checks into eChecks transactions and integrations with Web- based systems, so it holds a lot of promise for companies trying to disrupt old ways of doing things. Entire markets such as real estate and health care could see their payment processing systems transformed by integrating eCheck. One of the limitations of the ACH system has been restrictions on the amount of data that can be attached to the digital record of each transaction. eCheck was designed to allow unlimited, yet structured data, such that each eCheck can carry a wealth of information about the parties’ identities and context around the transaction. The next few years will likely see a new wave of innovation around eCheck as technology providers discover all its possibilities. Getting Started with eCheck $QXPEHURISD\PHQWSURFHVVRUVKDYHEHJXQWRRHUH&KHFNSD\PHQWSURFHVVLQJ$V\RX evaluate the options, here are a few questions to be sure to ask eCheck services: • What is the per-transaction fee for each eCheck? What are the up-front and ongoing costs for your service? • 'R\RXRQO\SURYLGHH&KHFNSURFHVVLQJRUGR\RXDOVRRHUFUHGLWFDUGSURFHVVLQJ" • &DQΖRHUP\FXVWRPHUVGLVFRXQWVRUUHFXUULQJSD\PHQWVXVLQJH&KHFN" • 'R\RXRHUDPRELOHDSSVRΖFDQSURFHVVSDSHUFKHFNVDVH&KHFNV" • 'R\RXRHUDQ$3ΖVRΖFDQFXVWRPL]HRUEUDQG\RXUH&KHFNVHUYLFH" PayStand’s Guide to UnderstandingDocument ACH and eCheck Name Pagepage 10