Blog|6 min

ACH, EFT and eChecks: Which Is Right for My Business?

Mark Gervase
Bill.com, Director, Product Marketing

It should be easy to pay and get paid, right? After all, a steady cash flow is critical to any business. Moving funds back and forth should be simple.

Unfortunately, it isn’t always easy—not until you have the right process in place. 

And choosing the right payment service can be complicated, especially when the options come with so many different terms. ACH payments. EFTs. eChecks.

What do they all mean, how do they relate to each other, and how can you use them to simplify your business bill pay process?

When it comes to these 3, here’s the bottom line: 

  • EFT stands for Electronic Funds Transfer. It’s an umbrella term for any kind of payment that’s made electronically.

  • ACH stands for automated clearing house. An ACH payment is a specific kind of electronic payment that uses a banking network (the ACH network) in the U.S.

  • An eCheck is a specific kind of ACH payment.

In other words, an eCheck is a kind of ACH payment, which is a kind of EFT. So you don’t really have to make a choice between them.

Better yet, Bill.com lets you make several different kinds of EFT funds transfers, including both ACH payments and eChecks. When you use Bill.com, you have access to all of them.

The article will walk you through each of these terms, explaining each one and laying out their uses and benefits for your business.

What is EFT?

EFTs, or electronic funds transfers, are just what they sound like: deposits or payments that are made electronically from one account to another. You can transfer money between two accounts at the same financial institution or between different banks. Both are forms of EFTs.

Some popular types of EFTs include:

  • ACH transfers

  • Wire transfers

  • Virtual card payments

  • eChecks

Because each of these options is electronic, they all make the bill pay process far quicker than traditional paper checks, and they’re generally considered safer because they’re not subject to check fraud.

How Do EFTs Benefit Businesses?

EFT transactions are easy and convenient, safer than paper checks, and cost-effective. They also lessen the chance of human error because they don't require so many human touch points along the way. 

All forms of EFTs can save valuable time and improve cash flow management. Businesses use them to purchase products and services for the same reason we use things like PayPal and Venmo in our personal lives—they just make things easier.

What is ACH?

ACH payments are electronic payments made in batches through the Automated Clearing House Network, a secure system for clearing electronic payments between banks in the United States. 

These transfers usually take about 2-5 business days to process, but more and more ACH transfers can now be processed as same-day payments.

Believe it or not, you’ve probably already used the ACH network. The ACH network is so large that, in 2018, it handled more than 27 billion payments. The best example might be your tax refund. If the IRS deposited that refund directly into your bank account, that was an ACH payment.

The ACH network includes the Federal Reserve and is used for other government payments, like social security payments for retirees. But it’s also extremely popular for non-governmental commerce and business transactions.

How Do ACH Payments Benefit Businesses?

As a kind of EFT, any ACH payment comes with all the same benefits of EFTs generally—they’re faster, cheaper, and safer than using paper checks.

More specifically, because ACH payments have to be cleared through an automated clearing house, they include an added level of security validation for those payments. They can also sometimes be reversed if the payment includes errors.

ACH payments let businesses pay their bills and invoices quickly and securely. When provided through the Bill.com intelligent business payments platform, customers report saving, on average, 50% of their time on accounts payable.

ACH vs. EFT: Which Should You Choose?

Since an ACH payment is just one type of EFT transaction, you don’t have to choose between the two. EFTs include all the different methods of transferring funds electronically, including ACH. 

What's an eCheck?

The term eChecks is short for "electronic checks." It’s one of those terms that has evolved over time to have different meanings in different contexts.

Some people use the terms EFT and eCheck interchangeably—meaning any kind of electronic payment could be called an eCheck.

Others will tell you that an eCheck is a specific type of ACH payment.

ACH transfers can be broken down into 2 major types: 

  • ACH credits “push” money out of an account—the account of the person or business making the payment initiates the transaction

  • ACH debits “pull” money into a account—the account of the person or business receiving the payment initiates the transaction

Technically, an eCheck is another term for an ACH debit, often used when merchants get authorization from customers to pull their monthly payments directly from their accounts. 

For example, a customer might set up their utilities service to pull automatic payments from their account every month. The utilities company might call these withdrawals "paying by eCheck."

How Do eChecks Benefit Businesses?

When “eCheck” is used to mean “ACH debit,” these benefit companies by offering their clients a customer experience advantage with the ease and convenience of automatic payments. 

Customers get to “set it and forget it,” and the business gets paid on time every month, automatically, significantly improving their accounts receivable.

In a broader sense, eCheck is often used to mean any EFT payment, coming with all the same benefits—faster, cheaper, and safer than paper checks.

ACH vs. eChecks: Which one should you choose? (And does it matter?)

If you’re using eCheck to mean a kind of ACH payment, obviously you don't have to pick between the two. If you’re using eCheck to mean any electronic funds transfer in general, you still don’t have to choose because an ACH payment is just one kind of EFT. There's no important difference because one is just a more specific form of the other.

Why Online Payments are Good for Your Business

Go paperless. Since all EFTs, including ACH and eChecks, are sent through an electronic payments system, there’s no need for paper. Billing invoices can be sent and approved digitally, and all records are kept through your banking or payments system ledger.

Lower costs. In addition to saving you a significant amount of time, ACH payments in particular can also save you money on transaction fees. Typically, ACH processors charge a flat rate, which can range from $0.25 to $0.75 per transaction, while other forms of EFT providers charge a percentage—like PayPal’s 2.9% fee.

Improve cash flow. Paying vendors electronically is reflected in your account immediately, eliminating the long process of reconciling payments associated with paper checks. Automatic electronic payments also let you predict and plan for those changes in your cash balance.

Keep your vendors happy. Vendors can email invoices and get paid quickly, reducing the time associated with sending a paper invoice and waiting for the approval and mailing of a paper check. ACH also saves them the high fees charged by credit cards.

Increase bill pay efficiency. When you utilize a cloud-based accounts payable automation solution like Bill.com, you get many more time-saving features, including the ability to automate the approval process. Imagine bills flowing smoothly through approvers and on to payment, according to your own rules and work flows—even sending automatic reminders. Bill.com also lets you store invoices, communication, and all other associated information and documents digitally with each individual bill, so you never have to hunt for anything. And your finance team can operate remotely, accessing the system via phone through our Apple or Android app when they don't have a computer handy.

If you’d like to see whether Bill.com could save your company 50% of the time you spend on accounts payable, set up ACH payments in Bill.com today with our risk-free trial.


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