Posted by NationalACH on Mar 02, 2021
echeck payment processing

Pros and cons of three ways of processing echecks. Discover which method is right for your business to accept echeck payments.

What are Echecks?

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

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

The more payment methods you accept, the more sales you make.  Echecks are a great way for you to get more orders from customers who don’t have cards, are maxed out on cards, or who simply prefer to pay you through a bank account, rather than with a card.

There are three ways echecks are processed.  ACH echecks, deposit of checks to your business bank account, and echecks that clear through the processor.  Below we examine the pros and cons of all three. 

ACH Echecks

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

The advantages of ACH echecks are:

  • Lowest cost method of accepting payments online. For ecommerce, echeck rates are 50-80% lower than cards. 
  • Familiar and trusted. Most Americans 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.

The disadvantages of ACH echecks are based on limitations required by, the governing body of the ACH network are:

  • Revokes (aka “chargebacks”) 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.
  • These ratios are very difficult to maintain, especially for higher risk merchants.

Echecks Processed through Your Business Bank

echeck payment processing
echeck payment processing

The processor creates “substitute checks” and deposits the items in your business bank either electronically or depositing / overnighting the checks. 

This is a good option only if you have extremely low revokes or returns.

The pros of clearing echecks through your bank account:

  • The echecks are in your bank account same or next business day, giving you fast access to your money.
  • Great for business-to-business transactions because there are seldom returns or chargebacks on business payments.  
  • Good option for low-risk industries with consumer transactions such as payment of household bills.

The cons of processing echecks through your bank account:

  • Returns and revoked transactions can occur, particularly for business to consumer transactions. Returned and revoked transactions are expensive through a business bank.
  • If your bank sees returns and revokes running through a business bank account, your account may be flagged. And you may lose your business operating account.
  • Not all business banks accept substitute checks.

Echecks Through a Processor’s Account

This is the recommended option for high risk merchants.  Echecks clear through the processor’s account.  Cleared funds settle to your business banks account via an ACH credit, protecting your business operating account. 

Advantages of clearing echecks through a processor’s account

  • Highest ratios for revokes and returned transaction than any other payment method. High returns & revokes are no problem at all.
  • Great for high risk merchants.
  • Super solution for industries that are prohibited or restricted by card and ACH processors.

Disadvantages of clearing echecks through a processor’s account:

  • Settlement times are longer because echecks can have “trailing returns” since many banks still process echeck returns manually. The processor needs to be sure all returns have come in prior to settling cleared funds. 
  • Rates are higher than ACH echecks


Echecks are more popular than every 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 more information, contact info@NationalACH today.  Or call 866-ACH-7600 now.