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Gary Sanders: Should Organizations Use E-Checks As A Form Of Payment

A profile picture of Gary Sanders, seasoned expert of utility billing.

Utility industry expert Gary Sanders has partnered together with MuniBilling to help give readers an in-depth look into the world of Utility Billing Systems.

For today's Ask The Expert blog, we'll focus on e-checks as a digital payment option for your customers to use when paying their bills!


Q: With more organizations going digital with their billing operation, digital payments are slowly becoming more available for paying bills. However, commonly the digital payment that organizations seem to need clarification on is e-checks. Can you describe what an e-check is?


A: E-check payments allow your customers the opportunity to enter their bank routing and account numbers and submit a payment to be electronically transferred from their bank account.

This process is essentially the same as a bank draft, except the customer initiates the process rather than your office sending an ACH file to the bank.



Q: Then, what are the main benefits of accepting e-checks as a form of payment?


A: First, let’s examine why you might want to accept e-checks. For starters, transaction fees are generally lower for e-checks than for credit cards. This means if your utility absorbs the cost of processing online payments without charging a convenience fee, it costs you less to process an e-check than a credit card payment.

If you charge a third-party convenience fee, your customer will pay less than if they were to pay using a credit card.

Another reason to consider accepting e-checks is that some customers have checking accounts but no credit or debit cards, so without the e-check option, they wouldn’t be able to pay online.



Q: Are there any significant disadvantages?


A: E-checks are subject to being returned if the customer incorrectly enters the e-check information.

This is because, unlike credit cards, there is no validation of the routing or account numbers as your customer is entering the payment. Likewise, there is also no verification of funds availability.

What this means is, unfortunately, e-check transactions are subject to honest mistakes in entering the information.



Are there reasons or times utilities might not want to accept e-check payments?


A: Many utilities have experienced customers writing bad checks on cut-off day to get their water reconnected. Similarly, I’ve had utilities describe customers paying online using an e-check to accomplish the same thing.

So, if your utility doesn’t accept checks from customers who have been disconnected for non-payment, you might not want to accept e-checks from them, either.



Q: How do you get your Customers to use e-checks instead of other payment methods?

A: I think it’s generally a case of personal preference for your customers. For
customers without credit or debit cards, e-checks are the only way to pay online.

If you
charge a convenience fee for credit card payments, charging a much smaller fee, or not charging one at all, for e-checks is the best method to entice customers to pay using e-checks.



Operational Analysis

Gary's 40+ years of experience in the industry has granted him valuable knowledge for any billing entity. With the wealth of his knowledge, you can request an Operational Analysis for your organization from him!

You may be wondering, what exactly is an Operational Analysis? Well, it essentially is when Gary looks through ALL of your systems and interviews your team to figure out how best you can improve your billing operations.

Here are a few of your organization's systems that Gary will assess:

  • Billing System
  • Accounting System
  • Metering System
  • Service Delivery System

The end goal of this analysis is to figure out how to save your organization time and money best. This could also mean suggesting another company's platform if it's the better fit for YOU.

Gary has hosted his own blog for the past ten years. Some of his more notable credentials is that he has designed, built, implemented, and supported both ERPs and Utility Billing systems. Thankfully, he's only a hop, skip, and jump away.

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