Posted by NationalACH on May 26, 2020
echeck payment for ecommerce merchants

Echecks protect high risk card & ACH merchant accounts.  And are a great payment option for high risk merchants who cannot qualify for card or ACH merchant accounts due to industry type.

Let’s face it.  Many high risk merchants have a hard time maintaining the low chargeback ratios mandated by the card brands.  ACH revokes (the ACH equivalent of “chargebacks”) are even more restrictive, with revokes not permitted to be more than 0.5%, about half the number of chargebacks allowed by the card brands.

Exceeding the ratios required to stay in compliance with card brand rules or ACH regulations can cause merchants to lose their merchant accounts.

How how can companies that cannot comply with card or ACH ratios continue to accept payments while protecting existing card & ACH merchant accounts?  And how can merchants than cannot qualify for card or ACH merchant accounts due to industry type accept payments?

Echecks are the solution.

Be Careful of Substitute Checks

The term echecks is used generically to describe different ways of debiting payments from consumers’ bank accounts.  Many processors that claim to process echecks for high risk merchants really cannot do so.  Which ends up causing great damage to merchants.

Lots of companies touting echecks as a payment method for high risk merchants simply create “substitute” checks.  The substitute checks are then scanned, couriered, mailed, or send via express delivery to the merchant’s own bank account for clearing.  This never works out well for high risk merchants.

Substitute checks as a method processing echeck payments is effective only for very low risk industries.  Examples of low risk industries include utilities, property management, governments, insurance, and mortgage companies.  These low risk industries rarely have customers initiate revokes.  And returned transactions are low because no one wants to have their utilities turned off or risk losing their homes, cars, insurance, or other needed services. 

High risk merchants are different.  Because revokes and returns are often an issue for businesses classified as high risk. 

Banks do not like to see revokes and returns running through a business account.  When this happens, the accounts are flagged and often closed.  Which creates a nightmare for merchants as they scramble to quickly find a new operating account with another bank.

Echecks for High Risk Merchants

How do companies with high revokes and returns process electronic checks?  The solution is to work with an echeck processor who assumes liability for returns & revokes.  Cleared funds are settled to the high risk merchant’s bank account via an ACH credit, similar to the way card transactions settle.

Because the items are processed outside of the ACH or card brand networks, there is far greater latitude for higher revokes and returns.  Giving high risk merchants the ability to accept more payments without worrying about jeopardizing card and ACH merchant accounts. 

The payment method is also helpful for recurring billing models which are common in many high risk industries.  Examples include lenders, collection agencies, nutraceuticals, adult entertainment, and ecommerce merchants selling products / services on a recurring basis.

How to Use Echecks to Protect Your Card & ACH Merchant Accounts

The highest risk for chargebacks, revokes and returns occurs the first time a consumer pays you.  For companies with recurring billing models, the risks are greatest for the first few recurring billing transactions. 

High risk merchants often will “vet” a new customer by using echecks for initial payments from a consumer.  Once the customer is vetted and it is confirmed that no chargebacks, revokes or returns ensued, the customer can be transitioned either to card or ACH payments.   

Bank debits are more stable than cards for recurring payments.  Bank accounts rarely change.  It’s simply too much hassle to change banks since direct deposits of wages and payments for household bills are tied to the bank account.

Compare this to cards, where more than 20% of American debit and credit cards are reissued each year, requiring updated card info for recurring transactions. 

Echecks give high risk merchants that need more flexibility on chargebacks, revokes or returns a proven method to successfully process payments.  And high risk merchants who do not qualify for ACH or card accounts now have an effective way to electronically receive payments from consumers.

Additional Benefits of Accepting Echecks

Card and ACH merchant account providers establish monthly caps on volume, limiting the dollar amount that can be processed and stifling growth.  In addition, merchants needing to accept high ticket transactions often find it difficult to find payment processing solutions due to potential chargeback risks associated with high ticket sales.

Echecks eliminate these roadblocks.

When your echeck merchant account is approved, you have unlimited processing capacity.  Multiple banks are connected to the echeck processor. 

There are serious benefits to you of having many banks on the back end. 

Multiple banks mean that you always have processing backup.  If a single bank decides to exit the high-risk arena, there are lots of other banks integrated with the echeck payment processing platform.  Processing continues seamlessly, with no risk to your account.  

Using multiple banks gives the processor the ability to distribute revokes & returns amongst various financial institutions.  This ultimately protects your echeck merchant account because diversified processing eliminates the dependence on a single bank. 

Want More Information?

NationalACH is one of the only merchant account providers in the country that offers high risk merchants a real solution for processing echeck transactions.  Interested in finding out more?  Contact us today by email at or call 866-ACH-7600.