October 15th, 2013 by Elma Jane
What is an electronic check?
Electronic Check also known as Echeck – is an electronic version of a Paper Check. Electronic Checks allow merchants to convert paper check payments made by customers to electronic payments that are processed through the (ACH) Automated Clearing House Network. It’s a fast, efficient, and secure way to process check payments.
Because of the many benefits and increased security methods that electronic checks offer, this method of payment is quickly growing in popularity. In 2007, electronic check conversion increased by 30%, with more than 3.1 billion paper checks converted to echecks through in-store transactions. Familiarizing yourself with how electronic checks work, the benefits and security features they offer, and how you can get started with electronic check conversion will save you time and money and help you provide greater protection for your business and your customers.
How it works:
Electronic check conversion is a simple method of processing payments, and the changes to how you do business are minimal. One of this method’s greatest advantages is that you can electronically submit checks instead of having to physically take them to the bank, saving you time and increasing employee efficiency.
When you receive a paper check payment from your customer, you will run the check through an electronic scanner system supplied by your merchant service provider like National Transaction Corporation (NTC). This virtual terminal captures the customer’s banking information and payment amount written on the check. The information is transferred electronically via the Federal Reserve Bank’s ACH Network, which takes the funds from your customer’s account and deposits them to yours.
Once the echeck has been processed and approved, the virtual terminal will instantly print a receipt for the customer to sign and keep. Employees should mark the paper check as “void” and return it to the customer. Your merchant transactions will be available online for viewing with customized detailed reporting, which may vary in features depending on the merchant service provider you choose.
Using electronic check conversion to process your customers’ payments holds many benefits over paper checks:
Benefits:
1. Received Funds Sooner. Businesses that use electronic check conversion have funds deposited almost twice as fast as those using the traditional check processing method, with billing companies often receiving payments within one day.
2. Reduced Fraud and Fewer Errors. Echecks are processed using an automated system, which cuts down the number of people who must handle the check, reducing the potential for error and fraud. Merchant service providers (NTC) also maintain, monitor, and check files against negative account databases that store information about individuals or companies that have past records of fraud to help decrease fraudulent activity.
3. Reduced Processing Costs. In general, the cost to process an echeck is substantially less than that of paper check processing or credit card transactions. Echecks require less manpower to process and eliminate incidental costs such as deposit and transaction fees that accompany paper checks. With Echecks, you can save up to 60% in processing fees.
4. Sales Increase. If your business didn’t accept paper checks in the past, you can expand the payment options available to your customers and increase sales by offering echecks. If you are converting from accepting paper checks to echecks, you can still expand your customer base by being able to accept international and
out-of-state checks without the worry of fraud. Echecks require account validation and customer authentication processes that identify bad checks within seconds.
5. Safe, Simple and Smart. Electronic check conversion is easy to set up and relies on the ACH Network for processing, the same reliable and trusted funds transfer system that handles Direct Deposit and Direct Payment. Plus, echecks are a smart choice for the environment, helping to reduce more than 67.4 million gallons of fuel used and 3.6 million tons of greenhouse gas emissions created by transporting paper checks.
Increase security with electronic checks – Electronic check conversion leverages the latest information protection features such as encryption and message authentication. Because of this, many retail merchants, merchant service providers, and financial institutions consider it to be one of the most secure payment methods in the electronic payment processing industry.
Authentication – Merchants must verify that the person providing the checking account information has the authority to use that checking account. There are a number of authentication services and products available to merchants, including:
Digital Signatures or Digital Certificates are a way of Encrypting information that gives the receiver a more reliable indication that the information was sent by the claimed sender. They are used by programs on the Internet to confirm the identity of a customer to concerned third parties, serving a similar purpose as a handwritten signature. Digital Signatures cannot be easily tampered with or imitated and are easily transportable, thereby making them a reliable method for verifying identity when implemented correctly. Digital Signatures are often used to implement Electronic Signatures, a broader term that refers to any Electronic Data that carries the intent of a signature.
Duplicate Detection and prevention is another way to reduce fraudulent activities. Financial institutions have software and operational controls in place to prevent duplication of the scanned electronic representations of customer checks.
Encryption The ACH Network automatically encrypts messages using 128-bit encryption and a secure sockets layer (SSL).
Public Key Cryptography is an Encryption/Decryption Security Method that uses one key to Encrypt a sent message and another to Decrypt it. With Electronic Check Conversion, the Private Key is a secret mathematical calculation used to create the digital signature on the Echeck, and the Public Key is the corresponding key given to anyone who needs to verify that the sender signed the echeck and that the electronic transfer has not been tampered with. Public Key Cryptography is another way to ensure authenticity of the Electronic Transfer of Funds.
What is the (ACH) Automated Clearing House Network?
The Automated Clearing House (ACH) Network is a funds distribution system that moves funds electronically from one entity to another. This highly reliable and efficient nationwide electronic network is governed by the rules established by the National Automated Clearing House Association (NACHA) and the Federal Reserve (Fed). The ACH payment system also handles debit card transactions; direct deposits of payroll, Social Security, and other government benefits; direct debit payments; and business-to-business payments.
How to get started with Echeck:
Useful advice to help make the implementation of electronic check conversion at your business run smoothly:
Choose a processing company that is well established in the market. While a competitive pricing package may also be of importance, having a processor that is reliable with a good reputation is essential.
Look for a processor that enables you to easily align your current business processes with your new electronic processing system. Ensure that you can easily export customer data and smoothly integrate the electronic payment processing system with your business management software.
Notify your customers that your business will begin using electronic check conversion to process payments. Federal rules require you to post a notification about this change in practice as well as to give your customers a takeaway copy of the notification. You must also provide customers a telephone number to request more information about electronic check conversion.
Posted in Electronic Check Services, Electronic Payments, Financial Services Tagged with: ach, authentication, automated clearing house, bank, check, checks, conversion, deposited, digital, echeck, electronic, electronically, encryption, fees, in-store, market, merchant, merchant service provider, money, online, payments, process, Processing, reporting, scanner, Security, signature, submit, terminal, transactions, virtual
August 16th, 2013 by Admin
Facebook is doing early testing of a payment system to store credit card data and processes transactions through PayPal or other merchant service providers including Stripe or Braintree. Facebook would store credit card data for use in purchases in Facebook Gifts and games played on Facebook. The thought behind the move being that it makes it easier for people to make mobile transactions on third party apps giving strength to their advertising platform.
In a statement, Facebook said…
“We are working on a very small test that gives people the option to use their payment information already stored on Facebook to populate the payment form when they make a purchase in a mobile app. The app then processes and completes the payment. The test is designed to make it easier and faster for people to make a purchase in a mobile app by simply pre-populating your payment information. It will be a very small test with 1-2 partners. Additionally, this test does not involve moving the payment processing away from an app’s current payments provider, such as Paypal. We continue to have a great relationship with our payment processing partners, and this product is simply to test how we can help apps provide a simpler commerce experience.”
This marks a bold move whether or not Facebook is actually conducting the transaction itself. Higher conversion rates on their advertising for app developers and advertisers. Mobile Wallets have a proven success for the likes of Amazon, Apple and Google where repeat transactions are the norm. The move could signal that Facebook is looking to move further into e-commerce and digital transaction payments and to buy or build their own payment processing division. It’s also a signal that digital identity and verification could be on the horizon.
Combined with the data Facebook already knows about its users, the company could store things like clothing sizes, shoe sizes, travel itineraries, music or event preferences and much more. This could be a catalyst to send that data automatically to vendors at the point of sale. Things like email addresses are already shared to third party apps if you allow them to. Loyalty rewards might be offered to users to allow the data to be shared with vendors for deeper demographic information.
In addition to mobile payments, Facebook has experimented with virtual currency transactions with its Facebook Credits initiative. They exited the strategy because mostly because developers moved to other virtual currencies like BitCoin and LiteCoin. Recently Facebook Gifts lets users send one another physical gifts and presents a gift suggestion when it notifies users of a birthday. Pulling down the barrier and simplifying a complicated transaction could make it a boon to retailers looking toward mobile payment processing.
Posted in Digital Wallet Privacy, Electronic Payments, Mobile Payments, Mobile Point of Sale Tagged with: digital, electronic, Faceboo, mobile payment, mobile wallet, PayPal, Stripe
August 6th, 2013 by Admin
In Canada, the game to corner mobile payment systems and the Digital Wallet is being played seriously. PayPal and Square are present but the 800 pound gorilla may have just entered the ring. Canadian banks are presenting merchant accounts capable of handling tap to pay transactions competing directly with Square and PayPal. Royal Bank of Canada has launched a mobile payment solution to provide contactless payment using Near Field Communication (NFC) enabled smartphones and tablets. Shoppers can simply wave their smartphone over a cash register or payment terminal and be on their way. No more swiping a credit card into a terminal or punching keys into a terminal and no more fumbling with cash or coins to settle a payment. Read more of this article »
Posted in Credit card Processing Tagged with: bank, bankers, blackberry, Canada, Canadian, Canadian travel agency agents, digital, electronic, financial services, ipad, Iphone, mobile, nfc, payments, PayPal, Rogers Communications, Royal Bank, smartphone, Square, tablet, travel
