Are e-checks a safe way to pay for travel?

As she paged through Viking River Cruises’ glossy brochure one recent afternoon, Diane Moskal noticed a new way to save money: If she booked the Waterways of the Tsars itinerary sailing from Moscow to St. Petersburg with something called an e-check, the cruise line promised to knock $100 off the fare.

An e-check is an electronic debit to your checking account, and it’s billed as a quick, convenient way to pay for your vacation that is “as easy as providing your credit card number,” according to Viking.

But like any smart traveler, Moskal wasn’t content with that explanation. “I see that the cruise lines advocate consumer savings if you pay by e-check,” she says. But she also found several complaints online, which made her hesitate. She wondered: Are e-checks safe?

As airlines, hotels and cruise lines offer new ways to pay for their products, Moskal’s question resonates across the entire travel industry. On several airlines, including American, Southwest and United, you can book a ticket through PayPal. Virgin Galactic made a splash late last year when it announced that it would accept Bitcoin for its spaceflights. One hostel in San Francisco, the Pacific Tradewinds, famously offers a 30 percent discount to guests who pay with the digital currency.

While Viking River’s e-check option isn’t new — it’s been available since 2008 — the concerns raised by Moskal and others are. It turns out that there are several important differences between paying by e-check and paying by credit card. And given the popularity of new electronic payment choices, it’s a good time to understand how they work.

Americans made 22.1 billion electronic payments using options such as e-checks in 2012, the most recent year for which numbers are available, according to a recent Federal Reserve study. The number of transactions grew at an annual rate of 5.1 percent from 2009 to 2012, the Fed reports. By comparison, consumers conducted 26.2 billion credit card transactions in 2012, and those numbers grew at a somewhat faster 7.6 percent annual rate.

The benefits to companies are obvious: They avoid paying any fees associated with credit cards and they receive the customer’s money right away, deposited directly into their merchant bank. But consumers have an advantage, too, at least according to companies like Viking.

“Guests who pay via e-check receive a discount of two percent, which reflects a savings that Viking passes on to the guest by not having to pay a fee to a credit card company,” says Viking spokesman Ian Jeffries. He says that the company also recommends payment via e-check as an alternative to a credit card so that you can avoid any interest rates or fees that some credit card companies may charge.

Viking is hardly alone. One recent study found that a quarter of airlines worldwide offer some form of alternative electronic payment option. As companies try to escape the high merchant fees charged by credit cards, these payment choices are bound to become more common in the near future.

“Conventionally, the discounted pay-by-e-check transactions are processed through the traveler’s bank, given the customer’s bank routing numbers and checking or savings account numbers,” says Oliver McGee, a former U.S. deputy assistant secretary of transportation for technology policy and a professor at Howard University.

E-checks come in two basic flavors: Check21 electronic payment processing, which is more flexible but also more expensive, and the more restricted ACH wire deposit payments, which are commonly used for handling direct deposits for employees and for paying bills.

As a practical matter, setting up an e-check involves giving the travel company basic bank information, typically gained through the bank’s routing numbers, as well as your account number, and authorizing the transaction.

But you also sacrifice something when you’re paying with an e-check. As with paper checks, once the money is deposited into the company’s account, your ability to reverse the charges is limited. Your right to dispute an e-check travel purchase is governed by either the ACH or Check21 terms and conditions as well as the electronic fraud protection conditions of your financial institution.

By comparison, a credit card purchase is protected by federal law under the Fair Credit Billing Act, which, among other things, lets you dispute charges for products you didn’t accept or that weren’t delivered as agreed, and which can quickly fix a billing error.

“You have more leeway to dispute a purchase made with a credit card,” says David Bakke, who edits the personal finance Web site Money Crashers.

If an e-check booking goes wrong — say, for example, that your cruise line files for bankruptcy protection and you want a refund — you may lose your money. Bakke says that e-checks can be reversed in only three cases: if you didn’t authorize the purchase, if the e-check was processed on a date earlier than authorized or if the amount of the processed transaction is different from what was authorized. Otherwise, the money is as good as gone.

While complaints about e-checks are rare, grievances with companies over wired money appear to be increasingly common. Not a week seems to go by that someone doesn’t ask me to help retrieve money that had been wired to a company or an individual. These transactions are difficult, if not impossible, to undo. Generally, if you’re dealing with a small local company or an individual, you can kiss the cash goodbye.

After I explained the differences in payment methods to Moskal, she consulted her travel agent, who booked her on the Viking riverboat cruise to Russia this fall. “She never raised the question of paying by anything other than credit card,” says Moskal.

Would you pay for travel with an alternative electronic payment, like bitcoin or a wire transaction?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at Got a question or comment? You can post it on the new forum.

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  • BillCCC

    While I might use an alternative electronic form of payment, I would never provide my banking information to a third party.

  • LDVinVA

    Your banking information is provided every time you send a check to someone!

  • backprop

    Send a what now?

  • mbods

    Right, our financial info is out there, I just want a guaranteed way to dispute any funny business that might arise. Credit card seems the way to go…

  • Mikael Mik

    While Cash is “King”, everyone wants to seize the throne. The second you’ve lost power and leverage, all bargaining chips are out the door. Therefore, sticking to credit card payments for large purchases is par for course. Short term savings are easily overshadowed by the power of dispute and resolution.

  • LDVinVA

    I don’t understand what you are asking. Printed right on every check is the bank’s ACH Routing Transit number and your account number. Not to mention your name, address, etc. which is (probably) pre-printed on your checks.

  • Carver Clark Farrow

    Every time you write a check or use a bill pay service you are giving your bank account information to the world. That ship sailed forever ago. I would exercise the same discretion that I would when passing a physical check. Don’t give pout your information to Nigerian princes or Canadian lottery officials.

    The funny thing is that really large transactions are done by wire transfer. Not the funny Western Union transfer but real bank to bank wire transfers.

  • Carver Clark Farrow

    I think backdrop is jokingly suggesting that paper checks are so rare, that he doesn’t even know what they are.

  • KarlaKatz

    Not all checks provide your account information. When paying by “Bill Pay” check, most banks (such as Huntington Banks) generate a one-time account number for that specific transaction. The Bill-Pay check does NOT have your actual account number on it.

  • KarlaKatz

    As I mentioned in my comment above, when using Bill-Pay services via a bank, a transaction-specific account number is generated. The payee never sees your actual account number, whether paid by electronic transfer or “real” paper check, sent by the bank via USPS.

  • Raven_Altosk

    I never use anything except a credit card. Period.

    Anyone who wants to offer you a “discount” for paying cash–especially contractors–is selling you a load of dirty diapers.

  • Guest

    I hope what I am asking here is a reasonable question: Doesn’t an e-check give the company the same banking information as a paper check, “the customer’s bank routing numbers and checking or savings account numbers”? Everytime we write a paper check, aren’t we giving out that info? That said, I too would never pay by e-check or debit card — or a paper check, always a credit card.

  • Ward Chartier

    I like the convenience and the occasional discounts associated with e-payments. To protect myself, I use a separate bank account which only has a small balance in it after transacting an e-payment. For me, e-payments are good for paying utility bills, school fees, insurance bills, property tax, etc. For those purchases for which I would like full consumer protection, I’ll use a credit card.

  • Carver Clark Farrow

    Surprising that’s not necessarily true. Both my business and personal accounts generate real, albeit funny looking, paper checks when I use bill pay to pay someone who is not set up to receive electronic payments. The checks carry the same account information that a regular check does.

  • Carver Clark Farrow

    Mine does :-)

  • MarkKelling

    That depends on the bank. Many aggregate payments being sent to the receiver into a single check with a list of payors attached. That type of item has the banks account info on it.

    If they do ACH payment then your item within that batch of payments will have something contained within it to identify your account if the item gets returned. Might not be your actual account number that appears on your paper checks, but it will allow anyone to access your account through ACH.

  • LadyLightTravel

    Many Credit Unions have “Bill Pay”. You tell the CU the names of authorized billers. Then the biller submits an invoice to the CU. The CU reaches into your account to get the money. I’ve also had money pushed out on a monthly basis to a designated company. Since it’s a push (not a pull) the company can’t get to my account. This works well for things like mortgages.
    But for travel? Credit card only. Too many things can go wrong and I want those protections

  • backprop

    Sorry, it was lost in translation :)

  • Carver Clark Farrow

    I’m not familiar with this. I guess the idea is that if you cancel a service, you can take the biller off the authorized list which prevents them from debiting the account?

  • LadyLightTravel

    That’s correct. The CU stands between the biller and the money. A great service!

  • Helio

    In Brazil is prohibited by law to charge different prices for different payment methods. The price must be the same for cash, check, CC, etc. Small business usually give you a discount for cash payment if asked, but big companies don’t do that to avoid potential problems.

  • bodega3

    Safe in what way? If a company you paid by cash or check defaults you are SOL. Credit cards are the best way to pay for any and all travel arrangements. If you live in the State of CA and the travel company you give cash or check to defaults and they are registered and have a current CST#, at least you have a back up and can apply to the fund to get your money. But that takes time and documentation. Use a credit card. We don’t take cash or checks any longer.

  • Cybrsk8r

    But what you all fail ro realize, is that the fact that electric company, for example, has your bank info off your check, doesn’t make it any safer to give that info to some travel company.

  • Cybrsk8r

    One other thing to rememeber about PayPal. The same rules apply when dealing with PayPal as apply when dealing with any other merchant in regards to using a credit card vs cash or a debit card.

    PayPal will send you e-mail after e-mail begging you to link your bank account to your PayPal account. DON’T DO IT!!!! PayPal would much rather have direct access to your money and not have to deal with the extra layer of protection your credit card affords you.

  • omgstfualready

    The banks are under the NACHA rules so you have more protection than you realize. They have X days to process your complaint, etc. When you cannot use a credit card, then pay your bills through your bank with ACH. Debit cards are very risky, you have almost zero protection.

  • Carver Clark Farrow

    What’s the difference between that and writing a check? You write checks to all sorts of people. I’ve written thousands of business checks over the past several years to all sorts of companies and people.

  • MarkKelling

    It is no less safe either as long as any company you provide this information to is reputable.

  • Carver Clark Farrow

    Can you elaborate?

  • Lindabator

    But companies are always looking for an alternative for those who may not have a credit card.

  • Lindabator

    Very true – even in the travel industry (and I mean the legitimate ones). We will accept your check, cash, or even credit card, but we then wire to a lot of international companies – of course, they have to be properly bonded for us to use them. :)

  • Mark Carrara

    I use my CC for everything I can. Not for safety or because I can protest charges, but because I earn points. I know Chris hates cards that give points, but I use mine all the time. I doubt I have written 3 checks in the last 12 months. I use ACH with the electric company because they have a ‘convenience fee’ to use a credit card.

  • Carlos

    The greatest form of paying (services) is a Credit Card. We just complicate lives by using other means, including cash and this so called e-check, which I still do not understand its meaning! The “other” silly method of DEBIT CARD is beyond my comprehension!!!!! Why people are so stupid to release their cash immediately (debit) and take an unnecessary risk!
    Of course this comment comes from a person that has never paid any interest on credit cards. Those millions of “want to be” who do not have money or control and spend like there is no tomorrow ………Well, that is another matter!