Getting paid is #1 priority for any business, including events. Income is the oxygen for every business and it needs to constantly be flowing in. I’ve said before that the first thing any business should automate is their billing process. Taking payments online, including a variety of event payment methods enables your event to be open for business 24/7 and for attendees to pay at their convenience.
There are tons of posts out there about how to accept credit cards for payment at your event and how to manage payments. There isn’t much out there on the topic of e-Checks as another payment method for events. I’ve found that my clients aren’t always sure how e-Checks work or what it costs to offer them and what the pros and cons are. So here you go! An entire post answering the important questions: What are e-Checks and should I offer them to my attendees?
What are e-Checks?
eChecks, also known as ACH payments, are basically an electronic way of paying with a check for a service. e-Checks are only offered in the US, with US bank accounts.
The way it works is pretty simple: the attendee enters his checking account number and routing number. The payment is then made by electronic transfer from the user’s bank account to yours. It’s easy, simple and most importantly, secure.
e-Checks have become pretty commonplace on as a payment method online. For anyone collecting payments online, it is a great alternative to credit cards, for many reasons. They are generally a lot cheaper on your end for processing, than credit cards. Transaction fees are lower so it lowers the overall cost to accept online payments.
What benefits of offering e-Checks are there for your attendees?
I’d say the pros more than outweigh the cons for your attendees. Let’s break down what the actual advantages are for attendees, and then the advantages for you.
Why your attendees will love e-Checks.
Everyone loves options. The more options attendees have to pay, the more likely they WILL pay. Everyone prefers a different payment method, so offering as many as you can decreases nonpayment. Some attendees might not want to use a credit card because they have an upcoming vacation and want to preserve their credit line. Or someone might be saving up for a vacation with their credit card points and ONLY want to use their credit card. As with anything in business, offering as many options as possible will satisfy the most amount of people.
If your event is business related, with companies and their employees attending, you might find many companies prefer to pay via e-Check, since bank accounts make for easy accounting than credit cards, and often times smaller companies might not have a company credit card at all.
A Note About Payment Methods and the Law
US law states that you need to offer at least one payment method that does not come with an additional fee. This is tricky when an event is trying to keep their pricing low and competitive, while also offering online payments (which cost money to do). Most add a transaction fee to credit card payments to balance their pricing with their cost. But that means you still need to offer a free option. Enter e-Checks! While e-Checks do cost money to process, they also offset your overall payment transaction rate, since the rates are about ⅓ of what credit cards are. It’s more cost effective to then offer e-Check as a free method, and then charge a transaction fee for credit transactions.
What are the benefits of offering e-Checks for you?
If it isn’t obvious already, the biggest pro to e-Checks for event professionals is the lower cost for processing. When you think about the cost to offer online payments, think about it in terms of your “money cost”. This just means there is a cost that goes along with GETTING paid. So for you, the money cost is the fees you pay to collect and process payments online – transaction fees basically.
The cost to take payment online is technically higher than someone mailing you a check. However, online payments are actually cheaper than collecting checks in the mail in the long run. How? There are less bounces and account receivables with online payments vs. paper checks.
Your money cost is the price of payment processing plus your account receivables and payment bounces. From this you get what is called a ‘blended rate’. By lowering the price of your processing (by adding e-Checks for example), you can lower your blended rate for all payment processing. Which means more money in the bank for you!
More benefits to offering e-Checks:
- Offering more payment options to attendees.
- There is a lower risk with e-Checks for charge-backs vs credit cards.
- Lower support issues with e-Checks which correlates to an increase in completed and on time payments.
- e-Checks receive preferred funding, so why shouldn’t you offer it!
Cons of e-Checks
It isn’t an option for everyone.
Until recently, you had to be a very large company in order to offer e-Checks as a payment method. The tech and payment processing agreements are very complex and has previously been an option only for paying utility bills, insurance companies, etc. Lucky for you though, more and more registration software companies and the processors they partner with can now offer e-Checks at competitive rates.
No more bounced checks, mostly!
Even though e-Checks aren’t paper checks, there is still a chance of the account not having sufficient funds and the payment bouncing. However the one advantage of e-Checks over regular checks is that when done online, the bank can check at that moment whether the account funds will be coming out of has enough to match the payment amount. There is still a chance of it bouncing if the funds are too low when the transfer actually happens, but it severely lowers the bounce rate. When we looked at our client data, out of 1 million e-Check transactions in our system, only .00345 bounced. Which is awesome! Physical checks have about a 2.23% bounce rate.
Longer wait time for funds clearing.
This might not necessarily be a con for you, but e-Checks do come with a 1-2 day wait time for the transaction to clear (this is when bounces happen). Basically once an e-Check is issued, it goes to processing and funds are transferred when the funds from the client account have been taken.
The guarantee of funds doesn’t exist as strongly with e-Checks as it does with offering credit cards. However, e-Checks still have a very low bounce rate and much lower processing costs. I’d say it’s a pretty solid business move to offer e-Checks as one of several payment options for attendees. e-Checks are low cost, and low risk!
Conclusion: Why you should be offering eChecks as an event payment method!
With anything there is a con, but the pros outweigh the cons pretty heavily on this one. Offering e-Checks is a cost effective solution for you and a great option for many attendees who might prefer a bank transfer over a credit card. Remember the more options you offer for your attendees to pay, the more people that will pay! And on time to boot! More options equals less excuses for attendees on why they can’t pay. This results in more money in the bank for you, and less money spent overall on your business costs. These costs include processing fees, waiting for late payments, and wasting manpower tracking down late payments one by one).
And here’s a fun hint to lower your processing cost even more. If you offer several payment methods, make e-Checks the default payment at checkout. For people that have no preference between a credit card and e-Check, you will get more e-Check payments and lower your overall cost of offering online payment.
Do you want to know more about integrated payments? Or why offering payments as part of your registration or onboarding process is vital to your cash flow? Check out some more posts I’ve written on that topic.