Posted by NationalACH on Jul 11, 2013
Check 21, High Risk Processing

Echecks Alternative to ACH Processing

High risk merchants find it challenging to comply with ACH rules requiring revoked transactions (chargebacks) to remain under 0.5% and returns to stay under 15%.  Echecks are a good alternative for companies that want to accept echecks but need greater flexibility for revokes and returns.  

Both ACH and echeck transactions clear through the Federal Reserve. However echecks are not subject to the restrictive rules of the ACH network.  Echeck transactions are governed by the UCC and long-standing check laws.

As a result, an echeck account offers significant benefits for high risk merchants.  There are no arbitrary rules governing revoked and returned transactions, as there is with the ACH network.

Naturally, you cannot have unlimited revoked transactions.  Very high volume of revoked transactions is a red flag to the bank that something is not running correctly with the business. 

However, you can certainly have higher revokes and returns with echeck processing than with an ACH account.

Benefits of Electronic Check Processor Accounts

Echecks have shorter periods of contingent liabilities for high risk merchants than ACH processing.  With ACH, consumers have 60 days to revoke a transaction.  With echeck high risk processing the time is reduced to 40 days.

Additionally, echeck processing often requires consumers to file an affidavit with their bank to dispute a transaction.  Many buyers will not go this extra step to revoke a transaction.

With ACH, processors are required to refund revoked transactions.  With echecks, you have greater latitude in deciding whether or not to refund a transaction.

An echeck account gives high risk merchants the ability to use a use a longer descriptor.  A descriptor is what buyers see when looking at transactions on their bank statements.  This makes it easier for buyers to remember what was purchased and helps reduce disputed transactions.

Echeck high risk processing can debit all US checking accounts, including those that ACH processing cannot.  For example, credit unions, savings & loans, small banks, brokerage accounts, and credit card check accounts can all be debited with echecks.

How Echeck High Risk Processing Works

Both ACH and echeck transactions clear through through the Federal Reserve.  The difference is that echecks use bank-to-bank image transfers rather than the ACH network.

From a user experience, echecks and ACH processing function in the same way. At checkout, buyers are asked to provide routing and bank account information.  Funds are direct debited from the buyer’s bank account and deposited into the merchant’s bank account.

Neither echecks nor ACH is “real time” processing.  Therefore, although funds may be available at the time of purchase, the funds may no longer be available when the transaction clears.  Therefore, merchants often wait to be sure a transaction clears before shipping products.


Echecks offer high risk merchants significant benefits compared to ACH processing. Most importantly, you can have higher revokes and returns with echeck processors than with ACH processing.  

An echeck account is now the norm for high risk merchants that want to the benefits of accepting electronic checks online without the restrictions of the ACH network.  

Are you a high risk merchant interested increasing sales and profits with an echeck account?