Electronic checks are, essentially, paper checks in an electronic format. Instead of relinquishing an actual paper check, a customer can instead provide the information from the check. The information is processed electronically and the transaction is complete.
Electronic checks are a handy tool to have as part of your business. There are several advantages to using electronic checks. Knowing these advantages can help you decide if your business needs to offer electronic checks as an accepted form of payment.
- Easy conversion – You do not have to store paper checks in your cash register. Just run a customer’s check through a scanner and all of the information is read. You can return the check to the customer and still receive your payment.
- Processing fees – The fees for the processing of electronic checks is normally lower than the fees for processing paper checks. Since the entire process, from the initial scan to the transfer of money, is done electronically, you can save a considerable amount of money in fees.
- The laws are the same – When you accept electronic checks, the governing laws are the same as for paper checks. In addition, electronic checks are also governed by same laws as electronic funds transfers. This helps protect you and the buyer.
- Lower operating costs – Since the fees are lower for electronic checks, your businesses overall operating costs will decrease. Every penny saved is a penny in profit, making your business that much more successful.
While the advantages of electronic checks are abundant, there are a few disadvantages to keep in mind.
- Electronic checks are not a guarantee of protection from unauthorized use.
- You will also have to purchase special equipment through which to scan the checks.
- Electronic checks are not instantaneous – it takes time for the check to clear, just like with a paper check.
Weigh the pros and the cons of electronic checks and make an informed decision to do what is best for you business.