FREE online courses on ECOMMERCE FUNDAMENTALS - Electronic Payment Systems - Electronic check system

The concept of electronic checking or e-checks is depicted in the figure given below.

                                                        An electronic check system

 

 An electronic check transaction consists of the following steps:

 

Phase I: Purchasing goods

 

1.The consumer accesses the merchant server, which presents its goods to the consumer.

 

2.The consumer selects the goods and purchases them by sending an electronic check to the merchant.

 

3.The merchant may validate the electronic check with his/her bank for payment authorization.

 

4.Assuming the check is validated, the merchant closes the transaction with the consumer.

 

Phase II: Depositing checks

 

5.The merchant forwards the checks to his/her bank electronically.

 

6.The merchant's bank forwards the electronic checks to the clearing house for being cashed.

 

7.The clearing house works with the consumer's bank, clears the check and transfers money to the merchant's bank, which updates the merchant's account.

 

8.At a later time, the consumer's bank updates the consumer with the withdrawal information.