How Do ACH Payments Compare With Paper Checks for Security?

The level of security that this method offers is one of the top reasons why lots of retailers and financial institutions have embraced using an ACH payment provider. And, customers are also embracing ACH payments for the additional convenience and security offered, with over twenty-five billion payments made via the ACH or Automated Clearing House network during 2020 alone. Since that amounts to a significant amount of money being transferred digitally, it’s crucial that the payments are as well-protected as possible. Keep reading to find out more about some of the main security advantages of ACH payments.

Less Online Fraud Risks

When it comes to online fraud, paper checks pose some of the highest threats. Not only are checks easier than any other payment method to defraud, but they also contain a lot of sensitive information such as account numbers, bank routing numbers, and personal identification information. Before they are processed, paper checks pass hands several times, putting them at a big risk of getting lost or falling into the wrong hands. On the other hand, making an ACH payment electronically is much more secure, as there’s no need to write out a check or for it to go anywhere.

Bank Verification

ACH payments are more secure than checks as they require the bank owner to verify that they own the account and want to make the payment before it will be processed. This is simply not the case with paper checks – anybody could get hold of a check book and write out a check to be processed without the permission of the account owner. Or, a check that has been filled out ready for processing could be altered if it lands in the wrong hands. There are several options that companies can use to protect themselves and their companies, like Yodlee bank verification.

Instant Verification

With an increasing number of people using online banking services, instant verification provided by Yodlee bank verification is also on the rise. This is a quick and convenient way to verify a bank account before setting up an ACH payment. Generally, it will require the bank account owner to log in through their online banking account. Their login details and transactions are encrypted and secret, but it provides a confirmation that they own the account and are authorized to make payments from it, allowing the ACH transfer to be immediately set up.

Microdeposit

Since not everybody is going to be comfortable allowing a third-party access to their online banking, microdeposits are another option to consider, and one of the most popular. This usually involves sending two separate small transactions of under one dollar. Once these land in the account, the owner must verify the amount that has been sent to them in order to prove that they own the account and have access to it. On the downside, this verification method can take a few days to complete.

Compared to paper checks, both businesses and consumers today are favoring ACH transactions for their high level of security, and convenience.