What’s the difference between eCheck and ACH?
The eCheck system is the culmination of over twenty years of collaboration between the U.S. government, banks, tech companies and other stakeholders to enable check payments to function securely on the Internet. It is designed for businesses of all sizes, including individuals, to perform direct bank debits digitally within the well-established checking infrastructure. ACH, or Automated Clearinghouse, is a separate system that was developed in the 1970s to facilitate high-volume money transfers between trusted parties. It is most commonly used for applications like direct deposit payroll and automated loan payments. Because ACH enables both debits and credits, it requires an elaborate legal framework and high degree of trust between parties, which has limited its usefulness as an online payment method. eCheck enables secure, one-off or recurring direct bank payments that don’t necessitate a blanket authorization between trusted parties to function. Because eCheck works between banks without unnecessary middlemen, they also carry lower fees than ACH.The eCheck system was architected to exceed even the high standards for online credit card processing. It leverages state-of-the-art cryptography and digital signatures to ensure the validity of each transaction. The eCheck framework is further protected by the long-established legal structure around checks. Because eCheck payments are initiated by the customer, they show a clear authorization and intent to pay instantly, therefore dramatically reducing the refund and chargeback requests commonly associated with credit card charges.
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