How Electronic Check Payment Processing Works

How Electronic Check Payment Processing Works

There was a time — not long ago, really — when a person wrote a personal check, the recipient delivered it to their bank for deposit and it was processed manually. The process could take days to complete, which meant the depositor had to wait for the funds to clear.

Today, new technology has eliminated much of the delay by turning a paper check into an electronic transfer (debit), also known as an electronic check or e-check. If you’re a merchant or service provider, this means funds are electronically transferred from a customer or client’s bank account directly into your bank account through the Federal Reserve Bank’s Automated Clearing House (ACH) system.

Electronic check payment processing is check cashing simplified, and a hassle-free and inexpensive way to get paid faster. It’s just one of many merchant services that TSYS® provides to help you meet all of your payment processing needs.

The e-Check Process

The process begins when your customer writes a paper check at the point of sale. As a merchant or service provider, you run the check through a reader or imager that captures the required information, including the check number, account number and the bank’s routing number and merchant-related information to complete the one-time electronic payment.

A receipt is generated and printed for the check writer to sign, the check is voided and returned to them. The transaction will then appear on the customer’s bank statement as a debit, not a check. 

You then upload the captured check information for processing, and the proceeds are deposited into your merchant account within a day or two. The process is similar for a check that is mailed, except you retain the check after it is voided. 

Benefits of Electronic Check Processing

Electronic check processing offers numerous benefits. It eliminates the need to take checks to the bank, there are no deposit slips to complete, it reduces the chance of checks being lost or stolen and you get paid faster.

If you’re working from more than one location, checks can be converted at each location and funds deposited into one main account. Guarantee programs expedite the collection process by discovering NSF (insufficient funds) checks and other returned items.

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