According to The Electronic Payment Association (NACHA), nearly 16 billion Automated Clearing House (ACH) payments were made in 2006. This figure represents a 14.5 per cent increase over the previous year. Both brick-and-mortar and online merchants frequently use electronic checks to process check payments. Electronic checks
can simplify and streamline the payment process for customers who use checks and for merchants that accept check payments. However, there are also cautions involved with electronic checks. 1 With electronic checks, customers can receive instant acknowledgement of their payments. Merchants can be assured of the validity of a current account through the verification process. With electronic checking, customers can have 24 hour access to their current account transactions through electronic banking. 2 Increased Efficiency, Lower Costs, Environmental BenefitsProcessing payments online with electronic checks eliminates the need for stamps and envelopes, which saves time and money for customers. Processing electronic checks also saves money for merchants in processing costs, especially in the elimination of deposit and transaction fees. Electronic checks can also be an environmentally conscious choice, since less paper is involved in printing and processing the checks. 3 Security Concerns, Errors and "Float"Anytime computers are involved with sensitive transactions, there are bound to be security concerns. Fraud by unscrupulous merchants is one danger; hacking into the electronic records or interception of a transmission is another. Enhanced security must accompany any electronic payment system. There is also the danger of human error or equipment failure which can jeopardise the accuracy of transmissions or records. Customers should check their banking records carefully for unfamiliar or unauthorised transactions. Finally, consumers should be aware that electronic checks are processed much more quickly than paper checks, sometimes within hours. This process has eliminated much of the "float" that previously delayed the presenting of a check for payment for several days.
Every business, irrespective of its size, relies on financial transactions to maintain smooth operations. Therefore, you need to look for an efficient method to make and receive your payments. Today, a lot of businesses are turning to electronic and online transaction methods. However, many still prefer to use traditional options like cheques. To understand what works best for you, here is a list of the pros and cons of cheques for business transactions. Advantages of Using ChequesHere are some advantages of cheques that have retained them as a reliable option for business transactions.
Disadvantages of Using ChequesHere is a list of disadvantages of cheques that have urged people to switch to modern electronic options to make and receive payments.
Whether you wish to use cheques for your business transactions or not depends on two factors:
No doubt, cheques are outdated in a modern business setup. However, it is worth being open to this form of a business transaction as they give you several advantages. Additionally, it is one extra channel to make and receive payments. Therefore, it is never a bad thing for any business. Also Read:1) What is the KFC franchise cost in India? Stay updated with new business ideas & business tips with OkCredit
blogs in English, Hindi, Malayalam, Marathi & more! FAQsQ. Is it advisable to use cheques for a business transaction?Ans. Cheques are still quite a commonly used method for business transactions. They provide a simple option to initiate transactions until you complete the formalities for other electronic options. You also have an additional opportunity to receive payments from your clients and customers. So, depending upon the scale of your business and the preferred choices for customers, you may continue to use cheques. Q. What should I do if a cheque that I received bounces?Ans. The first step to take in this case is to contact the issuer of the cheque. Usually, it is an oversight or another issue in the account that caused the cheque to bounce. In that case, they may resolve the issue immediately. However, in other cases, when the client is defaulting wilfully, you can give them up to 30 days to make the payment towards your goods and services. If they still fail to do so, you may begin legal proceedings for your recovery. Q. Why is the use of cheques declining?Ans. The use of cheques is declining for several reasons:
Another important cause for the decline in the use of cheques is the increasing interest in paperless transactions. Q. How to get a new cheque book issued for my bank account?Ans. The account holder must provide a request letter for a new cheque book with details of the bank account. They may authorise anyone to collect in on their behalf. In the case of businesses or organisations, the letter must also include the company's official stamp for the request letter to be accepted. The chequebook is issued immediately upon the receipt of the letter. Q. Do all the partners have to sign for a cheque to clear?Ans. In most cases, all the partners must sign the cheque to issue it. However, this entirely depends upon the organisation's nature and the terms mentioned in the partnership deed. In some cases, a single partner may get recognised as the authorised signatory for the cheque. What are the disadvantages of electronic checks?Cons of eCheck Payment Processing
And once you deposit an eCheck, you may have a long wait before the funds arrive in your account. Funds from a debit card or online payment services like Paypal and Venmo are usually available within a few minutes, whereas an eCheck generally takes 3-5 business days to clear.
What are the disadvantages of electronic payment?Disadvantages of Online Payments. Technical problems. ... . Password threats. ... . Cost of fraud. ... . Security Concerns. ... . Technological illiteracy. ... . Limitations on amount and time. ... . Disputed transactions. ... . Loss of smart cards.. What are the disadvantages of cheques?Some disadvantages of checks are:. Some businesses do not accept personal checks.. Your bank may charge you a service fee for writing too many checks.. You may be required to keep a minimum balance in the bank.. Some banks may charge a fee for each month that your balance is low.. What are the disadvantages of electronic transfer?List of the Disadvantages of Electronic Funds Transfers. Customers need to have the funds available immediately. ... . You won't receive a copy of the canceled check. ... . It creates purchasing opportunities around the clock. ... . Payments can still “bounce” when using an EFT.. |