Legal Definitions - e-check

An e-check, short for electronic check, is a method of payment that allows funds to be transferred directly from one bank account to another over the internet. It functions similarly to a traditional paper check but is processed digitally. Instead of writing out a physical check, the payer provides their bank account and routing numbers, authorizing the recipient to debit the specified amount from their account electronically.

Here are some examples to illustrate how e-checks work:

• Paying a Monthly Subscription: Sarah wants to pay for her online streaming service subscription. Instead of linking a credit card, she opts to set up recurring payments using an e-check. She enters her bank's routing number and her personal account number into the streaming service's payment portal. Each month, the service electronically debits the subscription fee directly from Sarah's bank account, just as if she had written a check for that amount, but without any paper involved.

  This illustrates an e-check because Sarah is authorizing a direct electronic transfer of funds from her bank account to the service provider using her banking details, bypassing physical checks or credit cards.

• Making a One-Time Online Purchase: Mark is buying a new custom-made desk from an online furniture store. At checkout, he sees an option to pay by e-check in addition to credit card or PayPal. To avoid credit card processing fees or using a third-party service, he chooses the e-check option. He then inputs his bank's routing number and his checking account number into the secure payment form. The store initiates an electronic debit for the purchase amount, which is then withdrawn directly from Mark's bank account.

  This demonstrates an e-check as Mark is using his direct bank account information to make a one-time payment to an online merchant, effectively "writing" a check digitally.

• Settling a Medical Bill: After a recent doctor's visit, Emily receives a bill for her co-pay. The clinic's website offers an online payment portal. To pay the bill without mailing a check or calling with her credit card, Emily selects the "pay by e-check" option. She provides her bank's routing number and her checking account number, along with the bill amount. The clinic's payment system then processes an electronic transaction to pull the funds directly from Emily's bank account to settle her outstanding balance.

  This example shows an e-check being used for a bill payment, where Emily authorizes a direct electronic transfer from her bank account to the medical provider, replacing the need for a physical check.