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How Long Do E-Cheques Take to Clear?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedOct 20212 min read

As with many countries, the use of paper cheques in Australia is in decline. However, electronic cheques, or e-cheques, provide a faster alternative. Are e-cheques right for your business? We’ll discuss the e-cheque definition below, along with the typical times it takes for clearance with this payment method.

What is an e-cheque?

Also called an electronic cheque or online cheque, an e-cheque is simply a digital version of a paper cheque. Both payments transfer money from one bank account to another, using identifying details such as the BSB and account number. With these details in hand, the recipient’s bank can process the payment by identifying the appropriate bank branch and account of the e-cheque issuer.

For example, a customer might authorise an e-cheque as a direct debit payment to cover the cost of purchase. Once authorised, this electronic payment is debited from the customer’s bank account and deposited into the business’s merchant bank account via a third-party payment processor.

E-cheque clearing times

Digital cheque imaging has significantly sped up the clearing process for e-cheques. While in the past it would take up to six business days for processing, in many cases e-cheque clearing times only involve one or two business days.

However, PayPal lists its e-cheque clearing times as up to six working days in comparison to its Instant Bank Transfer service, which is instant. It provides the e-cheque service for users who directly link their bank account with their PayPal account and don’t have any other payment information available, such as a credit or debit card.

As you can see, processing times can vary widely depending on whether you’re sending an e-cheque directly through your bank or with the assistance of a third-party platform like PayPal. It’s best to carefully compare your options to be sure you’re clear about processing times.

E-cheque examples

Some types of business benefit more from electronic payments than others. Typical situations where e-cheque examples are used include subscription-based businesses. Accepting e-cheques allows the business to take recurring payments electronically from its customers. E-commerce businesses can also benefit because it’s better to offer site visitors as many payment options as possible to maximise revenue.

Advantages of e-cheque vs paper cheque

There are several reasons to consider using electronic payments like an e-cheque rather than a traditional paper cheque. Australian banks are phasing out paper cheques, strongly encouraging their customers to use electronic payments instead. E-cheque clearing times are lower than paper cheque processing times in most cases, because BECS and account numbers simply must be verified by the banking system. No scanning or manual processing is required.

Additional advantages of e-cheques include cost. Many banks charge money for paper cheques, and credit card processing incurs a per-transaction fee. They’re also secure in comparison to paper cheques, which can be lost or stolen more readily.

Is an e-cheque right for you?

Compared to many of the online payment methods out there today, e-cheques are far from the fastest or most efficient option. However, they are an improvement on paper cheques and with improvements to the Australian clearing system, it’s now speedier than ever.

If you want to start accepting e-cheques from customers, you’ll need payment software designed to work with this type of payment. You should also ensure that your payment gateway is equipped with the latest security features to keep electronic payments safe. This includes:

Authentication
Encryption
Digital signature
SSL certificate
Duplicate detection

As with any electronic payment, e-cheques can be susceptible to hacking and fraud, so it’s important to be PCI DSS compliant and keep customer data safe.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.