Check 21 is the short name for the Check Clearing for the 21st Century Act. This law was enacted in October 2003, going into effect one year later.  It is the law that allows recipients of checks to create a digital format. This removes the need for any further handling of the original document. With the mainstream acceptance of online shopping and automatic payment processing, it was becoming more expensive to handle checks and process them efficiently. The Act was designed to improve the effectiveness of check payment processing.  Technological advancements have increased the resolution and clarity of scanned documents.

Quality image scanners are inexpensive and easy to operate. As a result, many businesses and consumers alike began to bypass the postal service and other transportation methods for quick receipt of important documents. Check 21 enables vendors to receive funds faster, improves customer service and allows for more efficient collection of returned check fees. Transportation costs are dramatically reduced as checks can now be scanned and electronically processed. As many duties are now automated, the personnel requirements have been reduced which saves on payroll. The space needed for storage of the checks can now be allocated to more useful purposes.

Check 21 affords many benefits to financial institutions and the commercial customer. For the industry, first and foremost, it eliminates the monetary risk associated with the movement and storage of billions of checks each year. The process of digitizing paper checks and allowing them to be legally used has streamlined the collection and return processing procedures by fully utilizing existing technology. By encouraging image exchange, the costs for accepting checks are reduced for all parties involved. For financial institutions, one of the primary benefits is in the reduced time for settlements.

Check 21 lowers the clearing fees by automating many processes that used to be completed by hand. It also is responsible for reducing costs associated with checks that need to be resubmitted. The electronic process reduces the check float, which allows funds to be moved to the vendor faster. This also helps the financial institution find instances of fraud quickly and deal with it effectively. For commercial customers, they are able to receive payments and have access to funds faster. Deposits are convenient and can be made daily. This reduces expenses associated with courier fees.  As a result, deposit cut off times have been extended and banking has been made easier.

ACH stands for Automatic Clearing House. It is a secure, private, nationwide system created specifically for electronic funds transfer (EFT). This system provides for the exchange of information between banks and other financial institutions. It uses the Federal Reserve Banking System to allow for the disbursement of funds used in credit and debit transactions. An example of the way the network functions is when your personal banking account receives and registers a paycheck that has been accepted via direct deposit.  Using this type of electronic system is faster than processing paper checks and inexpensive in comparison.

With the increase in online shopping and invoicing, business to business and business to consumer ACH transactions are becoming more common. The amount of funds moving through this network continues to increase as a result. With each transaction, there is a record created containing specific information. It includes the routing and account number that the payment is originating from, transaction amount, and the date of the transaction. If there is an expanded record format in the software being used, an invoice number may also be included. To the consumer, this transaction is seamless. However, there are many steps involved in the process to get the funds from one account to another.

A company, known as the receiver, authorizes a business or an individual, known as the originator, to begin a transaction to their account. This account can be held at almost any financial institution. The originator prepares the transaction information for all participating companies and sends it to the Originating Depository Financial Institution (ODFI). This is the organization that actually places the ACH files into the network for processing.  The central clearinghouse for the network processes all of the transaction files and distributes them to the appropriate Receiving Depository Financial Institutions (RDFI’s).  At this point, the funds are deposited into the intended accounts.

The date and dollar amount of the transactions are posted to the account statement. There are many regional ACH associations that are part of this network. The National Automated Clearing House Association creates and enforces the operating rules and guidelines by which business is conducted throughout the network. Though this process is faster than processing paper checks by hand, it does not happen instantly. From the moment a payment is authorized, it may take three to four business days for it to reach its intended recipient. Using this method for payment is secure and, unlike regular first class mail and can be tracked through every stage of processing.

For more information please contact us at www.nationalprocessing.com or call 800-403-8182.

The ACH network connects financial institutions nationwide. Transactions are regulated by NACHA and the Federal Reserve Banking System is its mechanism for the transportation of funds. It is one of the most secure ways to move money from one account to another. As the costs for personnel rise, many businesses are beginning to look for better ways to process payments from its customers and to make paying their own invoices easier. ACH processing is the answer for countless of these businesses. Using this network has several advantages.     The first of which is that it provides for faster access of funds.

When paper checks are written, they must be sent to the billing party and processed. Processing includes submitting the check for payment. This can take seven to ten business days. When using ACH processing, transactions usually take place in one to two business days. If the transportation time of the check being moved through the US Postal Service is taken into consideration, this is speeding up the completion time by as much as two to three weeks. In addition to faster access to the funds, using electronic transfers through this network is much more convenient for all parties involved.

The customer does not need to take the time to write out a check, address the envelope, add the stamp and drop it in the mail. The business owner appreciates that the funds are automatically deposited. There are no endorsements needed or trips to the bank required. ACH processing is much more cost effective than the traditional method of processing for a couple of reasons. First is that the entire process is almost completely automated. This cuts down on the personnel required to handle the processing of transactions. It also prevents costs resulting from non-sufficient funds.

Each time a check is submitted for payment from an account that does not have the funds to cover it, there is a charge. This can become an expensive prospect for the business and their customers. When using ACH processing, the funds can be confirmed before payment is actually submitted. Membership fees, mortgage and credit card payments are paid on a monthly basis. The ACH network allows for recurring payments to be set up for bills to be paid automatically. This reduces the instances of missed or late payments, which often results in late fees. All of these reasons contribute to companies conducting business in a more effective and efficient way.

It seems that everyone has a web site of their own. Home-based businesses have sites that are informative and professional. Many popular brick and mortar businesses also have an online presence. Everyone encourages you to make a purchase at their online store from the convenience of your home with their online payment processing system. In many instances they offer web-only discounts, free shipping or a gift with every purchase to entice potential customers. However, you may have some concerns about entering your credit card information.

How can you tell if they are legitimate? Is it safe to make purchases? Online payment processing is the method used for processing credit cards or electronic checks for e-commerce store purchases. Most web sites offer shopping carts that provide merchants many payment gateway choices. A payment gateway is the part of the transaction that has access to the information attached to a debit or credit card account. This information includes the account holder’s name, billing address, CV, and expiration date. It works in much the same way a point of sale system works at your favorite retail location. Payment gateways offer a variety of services to online merchants.

Though they may vary from one vendor to another, they all provide authentication for credit and debit card transactions. They are able to send and receive data over a secure connection that provides privacy for the web customers. This ensures the page used for online payment processing, which is where personal information is entered, is safe from the prying “eyes” of computer hackers. When the data is sent to the online merchant, the software creates a file in a format that can be accepted by the payment gateway. Once all data is received, the transaction commences and the request for authorization is made.

The customer’s credit card company confirms the information, validates the account and authorizes or declines the charge via their online payment processing system. If an authorization is received, the funds are removed from the customer’s account and deposited into the store’s Internet Merchant Account. Usually a confirmation or order number is created for the customer. If the charge is denied, a specific code is returned that indicates the issue. When making purchases online, look for the security seal. If it is not mentioned on the home page, check the frequently asked questions. This indicates that steps have been taken to protect the identity and banking information of customers.

We have all heard the phrase “The check is in the mail”. In most cases this is a sarcastic way of saying that something is probably not ever going to happen. In the past, people used checks as a reliable and common form of payment when they did not have enough cash on them to make a purchase or pay for a service that had been rendered. The consumer would write out a check for the amount they wanted to pay, sign it and hand it to the purveyor of the good or service that they were purchasing. The recipient would then take the check and endorse it, then deposit it at their financial institution. Today, many businesses prefer ACH check processing.

Standard paper checks are not as reliable as they once were for a variety of reasons. Checks that are mailed to the payee have the potential to get lost or misrouted. A check made out to cash, in the wrong hands can be deposited, even though it wasn’t intended for the person depositing it. In today’s uncertain economy a check is also no longer an ironclad guarantee that you will receive payment. A person is capable of writing a check for an amount greater than the funds which they actually have available. The recipient runs the risk of not only not getting paid, but incurring fees for the returned check when they accept a paper check. ACH check processing helps avoid this issue.

An ACH check is an immediate withdrawal of funds, at the time that the check is issued. No paper check has to be written out, though many financial institutions will provide a paper version back to the account holder to enable them to reconcile their statement. ACH check processing provides a safe means for businesses to accept checks and a secure way for account holders to issue checks, with no risk of the check not making it to the intended recipient.

If you have a business and are looking for ways to enhance the payment experience for your customers, then you should consider offering ACH check processing. Fast, simple and reliable, it provides a great way to ensure that you get paid on time, the first time and every time. It also protects your customers by preventing them from ever writing a check that may bounce on them or using a credit card with interest and finance charges attached.

Please contact us for more questions or comments at 800-403-8182 or at www.nationalprocessing.com

If you as a business owner decide that you would like to accept ACH payments, then it is important that you become aware of and strictly adhere to the ACH regulations that govern all transactions. Knowing these rules and regulations can help ensure that you maintain your right to accept electronic forms of payment for a long, long time. The penalties for not following the regulations can be very steep including fees and loss of the right to process electronic transactions. Luckily, the regulations are not terribly complicated or difficult to follow, so adhering to them should be relatively easy.

Most ACH regulations are directly related to Regulation E, which is the electronic funds transfer act. This regulation states that all ACH transactions must follow certain guidelines. Among those guidelines are that the merchant processing the transaction notifies the customer that they will be initiating an electronic payment. Another facet of this regulation is that the business initiating the transaction must make the consumer aware of any fee that will be charged for items which are returned as unpaid due to insufficient funds. A receipt also needs to be furnished to the consumer for any electronic transaction that is processed through the ACH system.

There are many different types of ACH payments, and accordingly a variety of regulations that govern those types of payments. Among the most important of all ACH regulations is that any transaction that you process must have the express permission of the card or bank account holder. Running a transaction without their permission can be grounds for the card or bank account holder to issue a chargeback, wherein the funds will be returned to them and you will be charged a fine. In addition, repeated abuse of this regulation will cause you to lose the right to accept electronic forms of payment.

There is no doubt that the ability to accept electronic payments has the potential to help you grow your business. Consumers like to have different payment options available to them. If you have made the decision that you would like to grow your business by accepting ACH payments than it is vital that you familiarize yourself with the ACH regulations that go along with accepting electronic payments. Knowing the rules, responsibilities, rights and regulations associated with electronic payment acceptance beforehand can save you a lot of money, time and hassle in the long run.