The future of e-checks in the web retailing marketing is looking bright, says CEO Michael Rees of National Payment Processors Inc., which provides e-check services for Kmart Corp. and other Internet and multi-channel retailers.
The number of e-check transactions for online consumer purchases grew to 6.9 million last year, triple the 2.3 million transactions in 2002 and nine times the 750,000 in 2001, according to the National Automated Clearinghouse Association.
“As merchants look for alternatives to credit cards and providing their customers with more payment options, e-checks will become a more popular form for paying for merchandise online,” Rees says.
Banks, utilities and publishing companies already offer e-checks as a web payment option for consumers, and Rees expects certain web-retailing categories, such as music clubs that collect monthly dues or other recurring payments and companies that sell digital content such as downloadable music, to also begin exploring ACH alternatives. “They save at least 1% of the transaction right off the bat because they aren’t paying the interchange rate,” he says. “That’s a pretty good incentive.”
Online or e-check acceptance is catching on with web retailers because they enjoy the added advantages of real-time check verification, decreased non-sufficient funds checks costs and not having to wait for mailed checks, Rees says.
“E-checks can be verified in about 10 seconds and NSF notices are sharply reduced,” he says. “Those are definite advantages for web retailers.”
Notes Jeff Foster, executive vice president of Retail Decisions, an e-commerce payment processor and risk management firm: "We’re seeing a lot of retail customers moving to e-checks and invoicing like Bill Me Later to lower their cost of credit. More than a third of them are moving some traffic to e-checks or Bill Me Later."