eCheck Payment Processing — Lower Fees for SMBs!

Small and medium-sized businesses want to grow and scale, but one thing that keeps them from climbing this ladder is the high transaction fees associated with credit card or online payment processing. As a small or medium business owner, you are used to offering goods and services online and are familiar with the concept of payment processing costs. This payment processing cost easily eats into your profits. One way your business can lower these processing costs is with the help of eCheck payment processing. 

This blog will help you understand how eChecks can reduce transaction fees, the benefits they bring to your business, and why various companies are switching to eCheck payment processing as a cost-effective solution.  Before understanding how eChecks reduce transaction fees, let’s know more about eCheck payment processing. 

What is eCheck Payment Processing?

Have you ever thought how easy it would be if you didn’t have to stand in long queues to deposit your traditional check in the bank? You can do it now—no long queues, wasting paper, and no going to the bank in your busy schedules. eChecks are here to solve your problems while you sit at home or in the office. eChecks are the digital version of traditional paper checks. It is the same as a conventional check, but you don’t have to hold or keep it safe. It works in the same way a traditional check does. It transfers funds from a customer’s bank account to a merchant’s account. 

You don’t have to write, sign, or mail it to anyone. eChecks are processed electronically. The process is also simple. The customer provides their bank account information to authorize a payment. The bank’s systems verify the transaction, and the payments are transferred digitally. The payment may take a few business days to process. 

How can eChecks Lower Transaction Fees?

1. Lower Processing Costs Than Credit and Debit Cards:

Customers and businesses use credit and debit card transactions. It believes in convenience, but with convenience comes high transaction costs. These high transaction fees affect businesses the most. But, in comparison to them, echeck provides low processing costs. Credit card payment processing fees cost 1.5% to 3% of the total transaction value. In contrast, eCheck transactions usually have significantly lower fees, often between 0.5% and 1%. This difference can lead to significant savings for a business with a high volume of transactions. 

Let’s look at an example. A small business processing $50,000 in credit card transactions monthly at a 2% fee would pay $1,000 in processing fees. If those payments were instead made through eChecks at 0.5%, the processing fees would only be $250, saving the business $750 every month. 

2. No Chargeback Fees:

Besides low processing fees, eCheck also helps businesses lower transaction fees with no chargeback fees. They help reduce the risk of chargebacks, which occur when customers dispute a charge on their credit or debit card, resulting in hefty merchant fees. According to data from the Federal Reserve, businesses can lose up to $1.70 for every $1 of chargeback fees. The fees affect not only the direct fee but also the loss of the product and the potential loss of future business. 

The good thing about eCheck payment is that it doesn’t rely on the same card networks. Chargebacks in eCheck payments are very rare. The payment process involves direct bank transfers, and it’s more difficult for customers to dispute these types of payments. With eChecks, businesses can avoid chargeback fees, saving time and money. 

3. Fewer Intermediaries mean lower fees:

Credit card processors have multiple intermediaries between customers’ and merchants’ banks. These intermediaries include the credit card network, the acquiring bank, and the issuing bank. These intermediaries may help process seamless transactions, but they also take a cut of the transaction fees, increasing the overall cost. 

eCheck payments involve fewer intermediaries. The transaction is initiated directly from the customer’s to the merchant’s bank. With no middlemen in the streamlined process, funds are transferred with fewer fees, reducing the costs of processing payments. 

4. Accepting larger payments without increased fees:

Credit card payments charge businesses high fees for large transactions. They may charge additional fees or require a more complex approval process. eChecks, however, allow companies to accept large payments without worrying about these extra fees. 

If your business deals with large transactions—such as B2B sales, service contracts, or recurring billions—eChecks are a great option. They help maintain a predictable and affordable payment processing cost, regardless of transaction size. 

This is how eCheck helps businesses lower their transaction costs. However, eCheck payment processing also possesses various other benefits that can help your business grow with seamless payment transactions. Let’s go through eCheck’s benefits other than lower transaction costs. 

Benefits of eCheck Payments: –

1. Improved Cash Flow and Faster Payments:

The most common concern traditional paper checks face is the delay in receiving funds. The process involves physically mailing the check; the merchant must deposit it at a bank, which may take several days. With eChecks, the system processes the transaction digitally, allowing the funds to typically appear in the merchant’s account much faster, usually within 1-3 business days. 

Quicker fund access helps businesses improve their cash flow, especially startups and small businesses that rely on timely payments to cover operating expenses. 

2. Increased Security:

While making a transaction, two things are important for any business: seamless and secure. And a breach of security while making a payment from a credit card always remains an issue. eChecks are generally more secure than credit card payments. They don’t involve card numbers, which can be stolen in data breaches. Instead, eChecks use bank account information to make transactions. This adds an extra layer of security. While it’s still important to make sure you’re using secure payment processors, eChecks can help minimize the risk of fraud related to credit card data theft. 

3. Wider Customer Base:

Not every customer is familiar with eChecks, their low fees and security features can attract a broader base of customers, particularly those who prefer using bank accounts over credit cards for online payments. eChecks are particularly popular for recurring payments or subscription-based services, where a customer authorizes the payment once and the funds are automatically withdrawn without additional hassle. 

4. Environmentally Friendly Option:

eChecks also align with eco-conscious business practices. Since they eliminate the need for paper checks, stamps, and physical mail, they are a more sustainable choice. If your business is looking for additional growth in sustainability and in reducing its carbon footprint, switching to eChecks for payment processing can be a small but effective step toward a greener operation. 

Considerations Before Switching to eChecks: –

eChecks offer various benefits, but there are a few things to consider before you decide to make a big change in your payment process. 

1. Processing Times Can Vary:

Credit cards provide instant processing but eChecks can take a few days to process. The process time depends on the payment gateways, it may take anywhere from 1 to 3 business days to transfer the funds. If your business model is something about immediate access to funds, eChecks may not be the best option for you. 

2. Customer Adoption:

There are customers that may not be familiar with eCheck payments, which can act as a disadvantage, and they may be hesitant to use the service. It’s important to educate your customers about the benefits of eChecks and offer clear instructions on how to use them. 

3. Limitation on International Payments:

eChecks work wonders as a payment method in domestic regions. For international sales, businesses may need to look into other payment options, such as credit cards or global payment processors, that can handle foreign transactions. 

Is eCheck Right for your business? 

eCheck payment processing offers a reliable and cost-effective solution for businesses looking to reduce transaction fees and streamline their payment systems. eChecks can be an excellent choice for small businesses that want to save money while improving cash flow by lowering processing fees, reducing chargeback risks, and increasing security. 

It may not be the right fit for every business, especially businesses with a need for instant payments or international sales. eChecks can be a great addition to your payment processing strategy, particularly for businesses that deal with recurring or large transactions.  eChecks as a payment method can save transaction fees, increase payment security, and improve cash flow. It can do this all while providing a more sustainable payment solution for your business.