High risk merchants are going for the echecks nowadays because echecks are not just a great option for payments but also a very easy method to increase business profits. According to most merchants, one increases his sales more than 15% when he offers the echeck payment option to his customers. It might sound strange, but it is true. Therefore, high-risk merchants should understand why echecks boost that much sales.

There are many potential customers that do not have cards, and because of that they cannot make many online purchases. It is estimated that about 30% US citizens do not have credit cards. Such people prefer make payments through a debit card of their bank accounts. The good news is that more than 90% Americans have bank accounts, and it enables them to make purchases with the help of echecks.

Some of the benefits of echecks are:

  • Recurring payments from card
  • Flexible processing
  • Cloud reporting
  • Recurring payments from bank accounts

With echecks, a high-risk merchant can accept card recurring payments. It means that transactions are encrypted, and they are also stored in the gateway. As a result, the business is totally safe. Due to flexible processing, the online recurring payments are possible. With the use of virtual terminals, the recurring payments are set up for mail/phone orders. Merchants can also upload file if they require bulk processing.

With echecks, merchants can also accept recurring payments from different bank accounts. Just set it and forget it for recurring billing. The echecks are the gold standard, and it safeguards the merchant’s income. The electronic check service providers also offer the cloud reporting feature. It simplifies the account management, and merchants can increase productivity. It also enables them to track and manage transactions.

High-risk merchants face the challenge of competition much more than others. The modern customers are very tech savvy, and they like to purchase from different websites. For many reasons, echecks have become the most preferred alternative payment option for American customers. A high-risk merchant is going to make more sales if he provides his customers with more ways to pay him. It also means that if a merchant does not offer echecks payment option to his customers then he will lose sales to his competitors that do offer echecks. Therefore, when a merchant accepts echecks, he takes the sales away from his competitors that do not offer the payment option of echecks.

The processing of electronic checks is not complicated, but still new merchants should understand how it works. The function of the echeck is to deduct the amount from the customer’s bank account and then send it to the merchant’s business bank account.

There are two ways for the processing of echecks:

  • ACH network
  • E-Check 21

The first way is through the network of ACH. The second way is the echeck technology which is based on the Check 21 bank-to-bank file transfers. The selection of method for processing is done after determining the requirements of that specific business.

ACH is a better option for merchants who can keep chargebacks less than 0.5% and returns less than 15%. It is the requirement of NACHA which is the ACH network’s governing organization. However, if the merchant cannot keep the ratios of chargebacks and returns below the limit then E-check21 is the right option for him. Whether a merchant uses the ACH network or the E-check21 technology, the rates for the electronic check processing are still less than card payments.

As compared to electronic check transactions, the card transactions are much riskier for high risk merchants. It is because a customer can chargeback card transactions up to six months after he has purchased the product. It is not the case with ACH. A customer can only revoke the transaction by maximum 60 days. In the case of business to business ACH transaction, the revoke period is three months.

The revoke period for eCheck21 is 40 days. However, much more time and effort are needed to revoke the check transaction which is a cumbersome task for the customer. It is very easy for a customer to chargeback a card transaction. A customer will have to visit his bank and sign an affidavit if he wants to revoke an echeck/ACH transaction. On the contrary, the customer only needs to call the card issuing bank when he wants a chargeback on his card transaction.

The priority of a high-risk merchant should always be to ensure that his customers get as many payment options as possible. It will help him to increase the flow of sale transaction which is crucial for the success of a high-risk business. It is a fact that debit cards and credit cards are still the most popular way to accept payments; however, other ways to accept payments should not be underestimated.

The latest way to accept payments is electronic checks, and they are getting very popular because the customer only needs to enter his banking information rather than sending a paper check through a courier service. Moreover, the information is either obtained by the direct consumer input or the merchant’s customer service staff can receive and enter it.

Different companies have developed their virtual terminals which makes it easy for the customer to enter his banking information. The terminals capture the customer’s account and routing number for processing. It is how the echeck processes in a secure way, and it is done through ACH (Automated Clearing House). ACH is a national network which processes the checks. The electronic check processing solution is not just limited for telephone orders or ecommerce industry. In fact, it can also be used on physical retailers.

Merchants belonging to all high-risk categories should take advantage of electronic checks because many companies have started to offer electronic check solutions and the benefits of using them are many. As compared to card accounts, setting up a high-risk echeck/ACH merchant account is much easier. The process to apply for an account is also very easy. A merchant needs to submit an application with the required documents and within 7 days, his account will be approved.


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