Payment Basics: How eChecks Work

You use them all the time to pay your bills and shop online, and your supporters often use them to make donations online. But what is an eCheck, exactly, and how do they work?

The term “eCheck” is short for “electronic check.” Basically, eChecks use a donor’s routing and bank account numbers to process payments electronically, much like the way they work in their more traditional paper form. Like paper checks, there are a few steps that occur between the moment your donor clicks “Submit” and when you receive their donation. Here’s what happens. Ready?

How eChecks Work

1. First, the payment information goes to an Automated Clearing House (ACH)

The information for the eCheck (also called an ACH payment or ACH transfer) is transferred electronically to an Automated Clearing House. The ACH receives the information in a “batch” that contains the information for other eChecks that are being processed at the same time.

2. The ACH checks the donor’s bank

After it receives the eCheck information, the ACH forwards that info to the donor’s bank. The bank will use the information to ensure that the funds are available.

3. The bank verifies the payment with the ACH

Assuming there are no issues with the eCheck, the bank will confirm the payment with the clearing house. This takes a little bit longer than a credit card payment — turnaround times average 48-72 hours.

4. The ACH distributes the eCheck file

When the bank verifies the information, the ACH can distribute the eCheck file to your bank. The bank then credits your account.

That’s it! It’s a pretty simple process, which is one reason that it’s been so popular for online shoppers and donors alike.