Posted by NationalACH on Nov 04, 2021
Echeck Processor Merchant Account

Discussion of the 3 main ways of processing echecks.  Discover which type of electronic check payment processing is best for your business.  Including high risk echeck payment processing.

What are Echecks?

Echecks are the most popular alternative payment method for US shoppers.  Millions of Americans regularly pay for goods and services with electronic checks rather than cards.

Echecks electronically debit funds from bank accounts.  Debited funds are automatically settled to your business bank account. 

Here are the three ways echecks are processed. 

  1. Electronic checks are cleared by the echeck processor. Cleared funds settle to your business bank via an ACH credit.  Best option for high-risk merchants with who cannot comply with ACH guidelines for revokes and returns.  Or for merchants who cannot obtain ACH accounts due to industry type.
  2. Electronic checks through the ACH network. Lowest cost method to process echecks. Great option if revokes and returns ratios are within ACH guidelines.
  3. Substitute checks. The processor creates the checks and sends them to your business bank account for clearing.  This method of processing electronic checks works well only if your revokes and returns are extremely low. 

Echeck Processing for High Risk Merchants

echeck payment processing
echeck payment processing

The reason merchants are considered high risk vary. 

Sometimes a high-risk classification is based on your industry type and you do not qualify for an ACH account.  Or you can be classified as high risk if your returns and revoked transactions are higher than allowed by, the governing body of the ACH network.  Or higher than allowed by your business bank. 

For high risk merchants, the best method of echeck processing is to clear the transactions through the echeck processors account.   The processor assumes the liability for revokes and returns. Cleared funds settle to your business bank account via an ACH credit. 

This method of processing echecks allows for the highest number of revokes and returned transaction than any other payment method.  Great solution for merchants who have high returns and / or revoked transactions.  Or for merchants that do not qualify for ACH due to industry type. 

Once approved, there are no caps on volumes.  You can process as much volume as you need.  Ten banks on the back end ensures processing continues uninterrupted. 

Examples of industries that successfully process echecks in this manner include, but are not limited to:  adult content, debt collection, attorneys, credit repair, file sharing, lenders (payday, tribal, money service businesses), money transfer, nutraceuticals, kratom, student loan consolidation, direct sales (MLM), travel, ticket brokers, document preparation, nootropics, online dating.

Any company experiencing high revokes or returns will love this method of processing electronic checks. 

ACH Echeck Payment Processing

ACH echecks are the lowest cost method of accepting payments.  For ecommerce, echeck rates are 50-80% lower than cards. 

Echecks process through the ACH network, the oldest electronic funds transfer system in the US.  The ACH network processes billions of transactions per year.

ACH is the most popular alternative payment method in the US and  is a familiar and trusted payment method.  Millions of Americans regularly pay household bills and receive direct deposit of wages through the ACH network. 

Same day ACH combined with advanced varication is an excellent payment option for merchants that need to quickly verify funds prior to shipping or fulfilling orders.

Still, the biggest drawback in ACH echecks is that returns and revokes must comply with the ratios set by, the governing body of the ACH network.  Revokes need to remain under 0.5%.  This is half the amount allowed by card brands.  Returns must be no higher than 15%, including administrative returns.  Another limitation of the ACH network is that many ACH processors do not accept high risk merchants.

Echecks Processed through Your Business Bank

This method of processing echecks is a good option only if you have very low revokes or returns (even lower than allowed by the ACH network).  The processor creates “substitute checks” and deposits the items in your business bank by scanning the items to your business bank.  Or mailing the items to your business bank for deposit.

If you have higher returns and / or revoked transactions, processing echecks through your bank account is risky because it jeopardizes your business bank account.  When your bank sees returns and revokes running through a business account, your account is flagged. Many merchants lose their business operating account due to processing electronic checks in this manner.

Companies processing substitute checks often promote the benefits, without explaining the risk. While it is true that the funds are in your account the same or next business day, returns and revokes can still occur, particularly for business to consumer transactions.  And not all banks honor substitute checks, driving up the number of revokes and returns that occur. 

Therefore, this method of processing echecks is good only if you have few returns or revokes.  It is a decent solution for business-to business transactions since these are rarely revoked or returned.  Or for industries where consumers seldom revoke payments or risk returns, such as payments of household bills, car payments and so forth.  

Still, even in these cases, ACH echecks have lower rates than substitute checks.  You’ll save money using ACH echecks compared with substitute checks if your industry is acceptable by ACH processors.     


Echecks are more popular than ever before.  If you do not offer echecks as a payment option, you risk losing business to your competitors that do.  Accepting echecks is the fastest way to increase profits without additional work.

For high-risk merchants that experience high revokes and returns, echeck payments cleared through the processor’s account is your best solution.  High returns and revokes are perfectly acceptable. This method of accepting echecks is also great for companies that do not qualify for an ACH account, due to industry type.

For companies with revokes less than 0.5% and returns under 15%, processing echecks through the ACH network is a good option.  Low cost and reliable

Processing echecks through your business account seldom works out well for merchants.  The exception is for very low risk merchants who rarely experience returns or revoked transactions.

For more information on electronic check processing, contact info@NationalACH today.  Or call 866-ACH-7600 now.