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An appealing alternative to paper checks is an e-checking account, which allows an account holder to pay electronically, either through money transfers or debit card payments. Keep reading to learn more about how e-checks and e-checking accounts work.
Similar to a paper check, an e-check is a way to send money or pay for goods and services, only electronically. Many people in the U.S. use e-checks as an alternative form of payment to credit and debit cards.
When you pay or send money with an e-check, the funds are automatically transferred directly from your bank account to the bank account of the recipient. E-check transactions are secure and encrypted, so you shouldn’t need to worry about someone stealing your banking information from an e-check transaction.
An e-checking account is like a regular checking account, but without paper checks. Payments are made using e-checks through the ACH network, which is used by most U.S. financial institutions.
Here is everything you need to know about sending and receiving e-checks.
There are no specific steps for receiving an e-check. Unlike with a paper check, you do not need to cash an e-check. Instead, the money is automatically deposited in your account once it has been processed through the ACH network. If you were supposed to receive an e-check and more than five business days have already passed, you can contact either your bank or the e-check sender for more information.
Some people might be leery of sending payments online, but these payments are regulated, and you’re not handing over a piece of paper with your name, address and bank account number. In many ways, it’s more secure than a traditional paper check.
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With e-checks, payments happen faster than with paper checks, which is a bonus for both parties in a transaction. ACH processing also can reduce costs by up to 60%. E-checking accounts are better for the environment as well, with less paper used, and therefore fewer trees.
Financial institutions also like e-checking accounts. They cost less to administer — much less to process — and are faster. Banks such as U.S. Bank offer e-checking for free, as opposed to charging for checking accounts.
It’s much harder to give an e-check as a gift — you can’t stuff one in an envelope and leave it under the Christmas tree. But be creative and include the amount in the envelope, and then simply transfer the money on the next business day. Remember, e-checks are processed by financial institutions, so they won’t operate on Federal holidays.
Some also might consider the faster processing times as a negative, if you’re writing a check for more than you have in your account. Banks will still charge fees for e-checks that overdraw an account.
E-checks are a great alternative to physically carrying around paper checks. They are usually faster than payments with paper checks and financial institutions often have mobile apps that have features to make this process even easier.
George Malone contributed to the reporting for this article.
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