Newport International Group Corporate Travel: E-checks are handy, but are they a safe way to pay for travel?

Newport International Group Corporate Travel: E-checks
are handy, but are they 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.
Newport International Group Corporate Travel
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 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 (www.moneycrashers.com).

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.