E-checks’ share of online payments is growing, reports Celent

E-checks have gained 7% of online payments and will account for 9% of online payments next year, says a payments industry report from researchers Celent Communications. E-checks offer one of the best alternatives to credit cards for online payments because they don’t require much consumer education, says Gwenn Bezard, senior analyst with Celent. “Many consumers are familiar with e-checks because they are already using the ACH to fund their PayPal accounts,” he says. “In addition, more and more consumers are using the ACH to pay their utility bills at web sites.” By the time they arrive at a web site offering an e-check, he says, “many have already made such a transaction.”

E-checks have steadily increased their share of payments since 2000 when they accounted for 3% of payments. Alternatives such as micropayments and offline cash payments applied to e-commerce purchases do not have enough share to register yet, according to Celent.

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Bezard says merchants generally don’t face a huge challenge in accepting other forms of payment. “A number of payment providers offer all the options, and so merchants don’t have to deal with a new provider on top of their existing provider,” he says. “Gateways typically have agreements with specialized payment solutions providers. In many cases, the option is already integrated into their existing products.”

For instance, First National Merchant Solutions, part of First National Bank of Omaha and a major merchant bank for online retailers, has been adding services to its PayFuse gateway, including e-checks this year. “We have seen an increase in merchants wanting to facilitate payments over the ACH,” says Jeff Hiatt, strategic products manager for First National.

A major difference between First National’s e-check offering and others’, Hiatt says, is that First National does not require the merchant to maintain a deposit account at First National to receive the ACH funds. “Most banks would require the merchant to have an account with them,” he says. “But our merchants are located all across the U.S. and they don’t necessarily want to have a checking or savings account with First National.”