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Financial Health

EFT, ACH, and eChecks: Which Is Right for Your Business?

To help determine the best payment services for your firm, here’s an in-depth look at each type of payment and what exactly it has to offer.

The terms “EFT,” “ACH,” and “eChecks” represent different forms of digital payment services for different forms of business operation. 

To help determine the best payment services for your firm, here’s an in-depth look at each type of payment and what exactly it has to offer. 

What Is EFT?  

Short for “electronic funds transfer,” EFT is a blanket term that covers all methods of exchanging money electronically.   

EFT transactions can be initiated by an individual or by a business, institution, or another organization. In order to become eligible for the vast majority of EFT transactions, you need little more than a bank account in good standing. 

Modern EFT processes generally take place over an online digital network. They have largely replaced paper-based transfers that are far slower, more difficult to track, and require the assistance of one or more financial industry workers. 

According to independent banking and lending authorities such as the online resource platform Bankrate, there are a wide range of valuable benefits to embracing EFT transactions, including: 

  • Lower cost 

  • Saved time 

  • Increased efficiency 

  • Higher processing speeds 

  • Failsafe electronic records 

  • Instant electronic/printable invoices/receipts 

  • Optional email confirmation 

  • Automated processes/elimination of human error 

Specific types of EFT transactions range from both online and point-of-sale credit and debit card purchases to preauthorized automatic monthly utility bill withdrawals. Other transaction types that fall under the EFT include direct deposits, wire transfers, virtual cards, personal computer banking transactions, and ATM (automated teller machine) transactions.   

Also, note that ACH and eChecks are both technically types of electronic fund transfer. 

What Is ACH?   

All ACH transactions are EFT transactions, but not all EFTs are ACH. In order to be classified as ACH, an electronic fund transfer must go through the Automated Clearing House.  

Established in 1974, the Automated Clearing House (ACH) is an electronic banking network that functions as a financial hub, enabling individuals and organizations to move funds from one account to another. ACH credits take money out of a specific account, while ACH debits place money into a specific account. In general, these fund transfers clear within a single business day.  

Common ACH transactions include direct deposits, direct payments, payroll services, consumer bills, tax refunds and payments, government transactions, B2B (business-to-business) transactions, and consumer transactions. The ACH ‘s governing body, NACHA, reports that the network represents over 10,000 financial institutions and enables nearly 25 billion electronic financial transactions on a yearly basis. All told, these annual ACH transactions have a combined value of more than $55 trillion.  

What Are eChecks? 

Just as ACH falls under the EFT umbrella, the eCheck (short for “electronic check”) is a particular type of ACH debit. Specifically, an eCheck is an ACT payment that pulls money directly from a consumer, business, or agency checking account. 

In order to set up an eCheck transaction, you must provide the routing number of your bank, the account number attached to your checking funds, and the name associated with that account. Available as an option for online payments that range from product purchases to IRS tax remittance, eChecks can also facilitate regular authorized checking account withdrawals to cover expenses, such as monthly utility bills. 

Choosing the Best EFT Solutions for Your Business 

As we have learned, EFT transfers offer a broad range of definite and powerful advantages over traditional paper-based financial transactions.    

That said, the specific types of EFT that will best benefit your company or firm will depend largely on your particular bank and payment processor because different financial service organizations have significantly different policies when it comes to EFTs. 

A wise business leader will do due diligence to find out exactly how much transactions of various types will cost as well as how long they will take to complete. To determine the best types of EFT for your business, you must first determine how much value you will place on money as opposed to time.  

When examining various ACH options, business leaders will quickly learn that many ACH transactions are significantly cheaper and faster than eChecks. This is largely due to the fact that some payment processors require additional backend steps to facilitate processing. However, these extra steps are becoming far less common, so many processors have begun to treat eChecks exactly the same as other ACH transactions.  

When funds must come directly out of a checking account, eChecks are the best option. They are far more efficient and secure than traditional paper checks, especially when a paper check must be mailed long distances in order to make a payment. 

Manage EFT with an Integrated Digital Professional Services Platform   

Want to get even more value from all your EFT transactions? Leverage the power of a high quality digital professional services platform that offers full EFT assimilation. The BQE CORE system, for example, offers a number of distinct benefits for users who enable ACH payments. Fully integrated with DesignPay, BQE CORE facilitates all manner of ACH transactions—including eChecks.   

EFT, ACH, and eChecks for Modern Business   

No matter what type of EFT fits your particular needs, the benefits of embracing online digital payment exchange are both considerable and widespread. By choosing your EFT methods wisely and positioning them within a larger digital professional services platform, you can boost their value exponentially. 

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