Check Processing Frequently Asked Questions
 
 
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Electronic Check Conversion:

Who gives the merchant permission to electronically charge my account?

You do.  Merchants using electronic check conversion (or sometimes called electronic check deposit) are required to obtain your signature authorizing them to present the check to your bank electronically and deposit the funds directly into their account.

Can I use the check more than once?

No. Just like a paper check, each electronic check represents a single purchase transaction.

Will this transaction appear on my bank statement?

A complete description of the transaction will appear on your bank statement in the section that includes other electronic payments such as direct payroll deposits and  ATM transactions.  Your bank statement will provide detailed information about each electronic check transaction including the merchant’s name, settlement date, amount and check number.

When will my account be charged?

Your electronic check transaction will be presented to your bank approximately two business days after your purchase – the same amount of time as you have with a paper check.

 How exactly is the money being moved?  

Your check is processed through a secure electronic device at the point of sale that captures the banking information and amount of the check. This information is then electronically transmitted through the Automated Clearing House (ACH) Network and presented to your bank.  The ACH Network has been in operation for more than 25 years and processes over five billion payments annually for the nation’s 13,000 plus financial institutions.  The ECT program is a natural extension of the capabilities of the ACH.

Remote Deposit Capture:

How is Remote Deposit Capture able to process a paper check as an image?

Since the U.S. Congress passed a law often called Check 21, banks and other members of the financial system are able to process electronic check images in lieu of the actual paper check.  This allows the check clearing system to operate more efficiently and economically by eliminating the need to transport and retain paper checks.

How does the use of Remote Deposit Capture, sometimes referred to as Check 21 processing, impact the timing of a paper check clearing the bank?

The technology employed by the remote deposit capture process can process and clear checks faster than traditional methods of clearing paper checks.  Checks processed with Remote Deposit Capture, Check 21, electronic check conversion, or electronic check deposit are almost always processed by banks ahead of any paper check transaction.

How does Remote Deposit Capture handle returned checks?

A returned check that was processed via remote deposit capture, or check 21 systems, is reversed back out of the recipient’s bank account in much the same manner as a returned paper check.  The timing is dependent upon the check writer’s bank sending the item back to the recipient’s bank as either an image or paper draft.

Check Guarantee:

What does check guarantee do for a merchant?

Check guarantee systems authorize or decline a check transaction by employing a variety of database searches and other risk management systems.  The end result is information to the merchant on whether or not the check would be authorized by the guarantee service provider.  If a guaranteed check meets all warranty requirements and is subsequently returned unpaid to the recipient, it is eligible for reimbursement.

Does check guarantee verify funds in the check writer’s account?

No.  But it can verify if there are currently outstanding returned checks associated with that check writer or their bank account.  As well as check for open/closed account status and valid/invalid routing and account numbers.

How is check guarantee different from check verification?

Check verification may use the same or similar processes to issue an approval or decline response to a merchant on any given check transaction.  While check guarantee also transfers the risk of properly authorized transactions from the merchant to the check guarantee provider, check verification leaves the risk of an unpaid check with the merchant.

Checks By Phone

What is a checks by phone transaction?

A checks by phone transaction is an ACH (automated clearing house) payment that is authorized by a consumer via a telephone transaction with a merchant. The consumer provides their checking account information and authorizes the merchant to debit their account for a single transaction.

How can a merchant accept checks by phone?

Checks by phone services can be provided to merchants meeting underwriting and NACHA processing requirements who have access to a PC with internet capability.

How does a checks by phone transaction differ from online check payment services?

Checks by phone transactions are manually keyed by the merchant based upon information provided by the consumer during a phone conversation.  Online check payment services originate from information keyed by the consumer from their PC.

Recurring Payments:

What are recurring payments?

Recurring payments, or recurring ACH payments, are prescheduled ACH transactions authorized by a consumer to a merchant or organization for payment of goods or services.

How are recurring payments created?

A consumer agrees in writing for a merchant or organization to debit his or her account at preset intervals for predetermined amounts.  The receiving organization schedules the ACH payments via an online terminal or virtual terminal.

Free Check Collections:

How can free check collections work for a business?

Any business that receives NSF checks which are under $2,500 and under 6 months old can submit those checks to a Free Check Collections provider.  Any eligible returned checks can be submitted for electronic representment using the ACH system.

Is Free Check Collections really free?

There are typically no fees to the merchant using free check collections.  The consumer who wrote the dishonored check pays the state allowable returned check fee.


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