A lot of business owners who get into legal trouble, they weren’t trying anything sneaky, they weren’t up to no good or knowingly breaking the law. More business owners than not are honest, hard working people. It’s not hard to find examples of people who are just trying to make a quick buck and don’t care if they have to bend the law to do it, sure, but for the most part, owning a business is just another way to make a living, and it just plain isn’t smart to jeopardize your job by playing fast and loose with laws and regulations.
Most business owners, when they get into trouble, it’s nothing shady or sinister. It’s forgetting to cross a t or dot an i. It’s a misplaced decimal on a spreadsheet, a middle-manager who never bothered to get a new hire’s tax information, or a credit card payment that turned out not to be PCI compliant. Running a business is a juggling act of math and regulations and people management and marketing and all sorts of things. If you run a business, you’ve got to be someone who is a master of multiple talents. Even if you work strictly as a freelancer with no employees, you still have to command not only the skillset for which you are being hired, whether it’s graphic design, programming, music composition, whatever it may be, as well as marketing and bookkeeping and so on.
What we’re getting at is this: With all of the work that goes into a business, you’re going to make a few errors here and there. Sometimes those errors are minor. Maybe you send an image to a client in the wrong resolution. No big deal. They let you know, and you send them an image in the correct size. Others may only involve modest hiccups. You forget to sign an employee’s check. Whatever, you wire the money to their Paypal account, instead, even if that means paying a small fee.
Other mistakes can be a little more severe. In particular, mistakes pertaining to payment processing. When you make a mistake at the point of sale, the fallout can be disastrous. It’s not impossible to get hit with charges like fraud and dishonest business practices simply because of some detail you missed, and there are a lot of details out there for you to miss.
And of course, it doesn’t matter what your intentions were. Whether your error was malicious or accidental, you’re still going to be hit with the same fines, fees and penalties, from cash charges to loss of license.
This is why, when we look for a payment processing service, we’re looking for someone who can cover all of those bases for us. In doing this, we can worry about our end of the job (and again, a business owner at any level has a big end of the job to worry about), and they can worry about making sure that everything is above board when it comes to the point of sale.
But, you still have to know what to look for in a payment processing service provider. It’s kinda like buying a computer. You might not be able to tell someone how RAM works or even what the letters stand for, but you know that the higher the number, the better.
So, what are we looking for when we partner with a merchant account provider?
There are a lot of answers, of course, so let’s narrow the focus to eCheck Payment Processing and extrapolate from there.
What Is eCheck Payment Processing?
eCheck payment processing refers to the Automated Clearing House, or ACH. So… what’s the Automated Clearing House?
In simple terms, it’s a network, based in the United States, that is used for processing financial transactions without the need for credit or debit cards. It’s sort of the closest we’re at right now to the digital “credits” based economy you might see in a science fiction film set in a Utopian future, the foundation for a cashless society.
eChecks are basically a paperless checking account. It works much the same way as a bank would, but with the convenience of not needing to actually pull out your checkbook and write a physical check for every purchase. This can make things easier when it comes to, for instance, automatic bill payments. The ACH process uses your bank routing and checking account numbers and then verifies and sends the payment through the system for fast transfer. Some transfers take longer than others. One service might be instantaneous while another might take a few days to clear.
And of course, bank policies play a part, as well. But generally it’s a fast and easy way to make payments electronically. And not just online. You can use smartphone apps to make eCheck payments in-store, as well.
So that’s the short answer: an eCheck is just a check that you don’t have to write by hand. The same information is exchanged, the same amount of money is transferred, but no paper is involved.
So it’s easy to see where this is going, right?
When the money isn’t tied directly to a credit card or a debit card or cash ever changing hands, there are a lot of security risks that come into play. With credit cards you have PCI compliance. A good payment processing service will take care of all of the PCI requirements for you and you’ll never really have to think about all the red tapes and ins and outs of credit card payments in the first place. For eCheck processing, we have the NACHA, or National Automated Clearing House Association.
The National Automated Clearing House Association is a not-for-profit group representing around eleven thousand institutions through eleven regional payment associations. This means that any individual company working with NACHA for eChecking will follow not only national guidelines, but regional, as well. The NACHA help to develop, govern and administer the ACH Network and is essentially the grounding force in eCheck transactions. American law is expected to follow the constitution, and eChecking is expected to follow NACHA protocols.
The NACHA is the main structural difference between conventional check processing and eCheck processing. In short, it would be difficult to manage a system like this without an organization like the NACHA in place. With actual paper checks there are enough security points already in place that it is a bit less of a concern. For starters, the requirement of photo ID and a signature makes checks difficult to cash without the legal right to do so, and the information is generally not kept in a permanent database when a paper check is handed over.
When payments go digital, on the other hand, there is quite a bit that can go wrong, quite a few checkpoints that are vulnerable to cyberattack. Having the NACHA regulations in place ensures that everyone who works in payment processing is operating on the same core standards. Some payment processing service providers may go above and beyond these steps, some regions may have stricter guidelines than others, but having the core principles of defense the same from one company or bank to the next helps to ensure a uniformity in security.
So with all of that being said, what are the benefits of eChecking, anyway?
Don’t most people have debit and credit cards these days?
Why do you need to add eCheck payment processing on top of that?
It seems like it’s just “one more thing” to worry about, but actually, it’s one less thing to worry about.
The key word when discussing the strengths of the eCheck is “flexibility.”
Flexibility is key when running any business.
Once upon a time you could just take cash. Then it was cash and check. Then cash, check, credit card, debit card. Now all of those, plus Paypal and smartphone payments and, of course, eChecks. There are just about as many methods of payment out there as there are customers looking to make those payments in the first place. Running a business in 2018 demands flexibility, and that demands offering as many payment options as you can to your customers.
But this is just another way of saying that you should offer eCheck payment to customers “because you don’t really have much choice.”
In fact, eCheck payments do have quite a bit to offer on their own merits, and not just because that’s what some customers prefer.
eChecking is one of the faster payment methods available. With bank cards a payment might take a little while to go through. That can be a problem when you’re tallying up the books at the end of the week and you’re still waiting on transactions that haven’t been completed yet. With an eCheck-enabled terminal, you can accept payments from any online-capable device. That means smartphones, tablets, a customer could bring their laptop into the store to make a payment if they like.
Some merchants choose to go completely paperless when it comes to taking checks. One of the biggest and most immediate benefits here: No more trips to the bank to drop off the checks at the end of every day. Nobody likes managing money out in public, at night. It may be rare, but we’ve all heard stories of hold-ups taking place outside of banks when people go to make their drop-offs after the workday is over. So this is a way to make your whole process much safer. And of course, the added security of NACHA protection doesn’t hurt, either.
If you have a lot of customers who like writing personal checks, it might be advisable to keep accepting them for the time being. But more and more shoppers are going totally paperless. They don’t carry cash, they don’t carry a checkbook, they don’t carry anything that can’t be shut off with a single phone call should they lose their wallet, and fewer and fewer are even carrying cards these days now that you can do almost everything with a smartphone or tablet. eChecks are a smart option for automatic payment systems, as well.
The flexibility, speed, efficiency and security provided by eChecks are simply hard to match for any conventional form of payment. It is interesting to note that NACHA has actually been around since the 1970’s. NACHA was always vital to automated checking services, but has become more so in recent years as people lean away from the checkbook and towards the smartphone.
In the 21st Century, money is almost entirely digital. Many of your customers may not have even seen a dollar bill in months. Using an eCheck-enabled payment platform is necessary simply for keeping up with the modern age. But beyond that, it offers a level of service that paper checks simply cannot compete with.