There are many benefits for a business to choose check processing software and services. One of the primary reasons is that it is faster and more convenient than accepting paper checks. Trips to the bank are unnecessary. As electronically deposited checks are processed ahead of paper checks, there is an improvement in recovery rates of checks that originally were returned due to non-sufficient funds. There are no re-deposit fees or fees on returned checks and collection fees are greatly reduced. This also means that the funds are accessed more quickly once the transaction is complete.

Although there are a large percentage of consumers that prefer to conduct business with credit cards and electronic payments, there are still many that continue to write checks.  There are check processing options such as remote deposit capture and electronic check conversion which enables a business to accept and deposit checks without making a trip to the bank. By accepting checks, businesses can provide another option for payment to their customers. This, in turn, increases sales while reducing the risk of returned checks. These methods enable businesses to accept checks as easily as credit cards.

Financial institutions often invest in comprehensive check processing solutions. They can help streamline processes to increase revenue and reduce overhead. Customer service levels can be enhanced at banks, credit unions and service bureaus. In most cases, the solution can be fully integrated into existing systems. Imaging is the most current technology in payment processing. Documents are scanned and stored on electronic media, rather than on paper in file cabinets. They can be archived and retrieved quickly and easily. The data contained in the electronic files can also be used to generate statements as needed. Manual and dual entries into existing financial systems are no longer necessary.

The technology employed allows for misread or unreadable characters to be corrected. Other functions do not need to be paused while this task is completed and it can be done remotely if necessary. Most solutions feature a full set of reports and anti-fraud measures. Signatures can be verified and authenticity of the check confirmed. Data export options enable formats to meet the user’s specifications and transmitted to a variety of industry standard media. Check processing software provides many advantages over traditional methods. It can save time and money by streamlining processes, and increasing check recovery rates. Fees for insufficient funds are reduced and the amount of personnel needed for processing the same volume is decreased.

Electronic Funds Transfer or EFT is the process by which money is transferred from one location to another electronically. It is faster than traditional methods of banking, which required an individual to go to the banking facility and deposit cash or paper checks. There are many ways that funds are transferred electronically every day. Checks from employers, the government, or other organizations that are deposited directly into a consumers account is done so electronically. This helps get the money where it needs to go within minutes of the initial transaction, anywhere in the world. Whenever goods and services are paid for with a debit card, funds are electronically transferred from one account to another.

EFT has simplified the procedure for transferring money. Instead of waiting days, it takes place in seconds. In some cases a bank may slow down the process to verify funds before the transfer is completed. For individuals that telecommute as opposed to traveling to an office, their paycheck is deposited directly into their personal accounts. It removes the risk of having paychecks sent through the postal service, making payment safe and efficient. Safety precautions such as encryption, verification and password protection are necessary for this type of transfer to occur.  If money is being sent from one country to another, currency and exchange rates are automatically calculated.

For businesses, EFT provides significant savings in consumables and personnel. Invoices do not need to be printed, stuffed into stamped envelopes and sent. Payments can be collected faster and more reliably. Many ACH processors offer software and services that allow you to process checks and debit card payments online. This software can integrate with products you already have. It often has features that allow recurring transactions as well as help reduce frauds and charge backs. For consumers using debit cards at an ATM, communication is required between several transaction participants for authorizations to be sent, recognized and received.

After being routed to an acquirer, the transaction is sent through several networks to the cardholder’s account and the merchant may require additional authentication. This may include a signature or entry of a PIN number. In the last few years, the advent of EFT has transformed banking methods from slow, unwieldy processes filled with error and potential risk to a streamlined process the moves money quickly and securely from one account to another. Payroll checks, government payments and monthly recurring bills can be paid easily. Money can be transferred anywhere in the world in just a few seconds.

The term ACH processing refers to the way business-to-business, electronic funds transfers, state and federal transactions are completed through the Automated Clearing House. There are several central clearing facilities in which this processing takes place. The Federal Reserve Board, Visa, and American Clearing House Association are all operators that are included. To take advantage of the Federal Reserve Automated Clearing House (FED ACH), a financial institution must become a member. This requires meeting strict operating standards. Once a member of the FED ACH, payments and debits are batched and transmitted electronically through the system. For a transaction to be successfully completed, there are several different participants.

The Originator is an individual or organization that submits the initial entries into the Automated Clearing House Network. Their financial institution is considered the Originating Depository Financial Institution (ODFI). This is where the account used for ACH processing is held. The ODFI submits the entries as a result of a request by the originator. The receiving Depository Financial Institution (RDFI) is the financial institution that receives the entries. It is to their account holders, otherwise known as the Receiver, that the Originator is sending payment. The central clearing facilities receive and transmit all entries in a batch, store and send system.

They are the Operators. There are also many third-party service providers. These are organizations that take action on behalf of any of the other transaction participants to ensure the ACH processing occurs smoothly and in a timely manner. The National Automated Clearing House Association, (NACHA) also known as the Electronic Payments Association is the governing body of the network. They provide the operating rules by which all participants must adhere to. Not only do they serve as administrator of the network, they are also the industry’s trade association. They have three primary goals. The first is to provide education services.

They ensure network members expand their knowledge of the network and its requirements by providing ongoing publications, distance learning courses and in-person training. The next area in which they function is in Membership Development. They provide consistent communication, regarding the value and best use of electronic payments and provide insights into existing policies. NACHA also defines and updates ACH processing rules and guides advocacy. Their communication and marketing activities include public relations, program marketing as well as participation in a variety of different industry advisory groups. They bring participants together to continue improving the network and adding value to those who use it.

Small business owners are often apprehensive about accepting credit cards. They believe that the payment processing fees and equipment will be too expensive. However, these are not the only concerns. There are many different companies that offer these services. Banks, independent organizations and the credit card companies themselves all have options to choose from. When selecting a company, consider what type of customer service they offer? Are they only available Monday through Friday during normal business hours or are they staffed weekends and evenings as well? Some businesses prefer to work with the bank where their business accounts are held.

One of the advantages to having their payment processing needs serviced locally is that they have already built a relationship with the financial institution. They understand how the business services work and are comfortable asking questions. However, there are also benefits to working with an independent sales firm. In many cases they specialize in providing these types of small business services. They often are flexible in the types of organizations they can work with as well. Most vendors offer several services bundled together and the rates that are discounted if purchased as a package. When comparing potential vendors, there are a few things to consider.

How reliable is their network? If it goes down unexpectedly, what is their backup structure? Are there support options available 24/7? Ask about their range of payment processing products. Do they offer full-featured solutions that allow you to take payment over the phone as well as online and manually? Can they work with your existing point of sale system or do you need to purchase equipment from them? Can they accept electronic gift cards and checks? Although price is not the only consideration, rates may fluctuate greatly from one vendor to the next. Some are very competitive, while others are not.

There are many fees associated with accepting credit cards, from the standardized monthly fees, to those that are charged as a percentage of every sale. There are also separate fees based on how payment was collected. Scanned cards may be charged with a different rate than those that have their numbers and other information manually entered.  Accounts often must meet a minimum amount in sales or an additional service feed may be charged. If you are a small business about to embark on the search for a payment processing company, take some time to research your options to find the vendor that will best suit your needs.

We are in the midst of what has been called the electronic age. The mainstream acceptance of the Internet has enabled information to flow freely and quickly. From email and chat being used to keep in touch with friends and family, to paying bills online rather than sending payment via the Post Office, everything seems to move faster. When the Check Clearing for the 21st Century, or Check 21 for short, was enacted in 2004, the speed with which check processing occurred increased. It was viewed as an easier and less expensive way for the financial industry to process check transactions.

In the past, a check would be made out, signed and physically sent to a merchant for payment. The merchant would then deposit it into their bank account. From there, the check could be transferred several more times before the transaction was considered complete. This would take days, sometimes weeks. Under Check 21, the check never needs to move once it is received by the merchant’s bank. Instead of sending the check with the accompanying receipt to its next location, the bank scans it. Once it is an electronic image, it is transmitted to the proper location.

The overall result of Check 21 to the banking industry is a substantial savings. There are no transportation fees needed to move thousands of checks from one location to another. Once the check is scanned, the data is uploaded in an approved format. Manual entry is not required and it takes only seconds to transmit the data to the proper network. This also decreases the amount of personnel required to maintain the volume of checks received. Research time for adjustments is unnecessary, collection expenses are reduced and the processing cycle is shortened from three weeks to a few days.

By having access to the check information more quickly, customer services are enhanced. Consumer questions about their account balance and recent transactions can be answered with surety. Although it enables the banking industry to realize savings in many areas, Check 21 does not mandated reduced fees charged to the consumer. Banks have the option of processing checks electronically, but they will not refuse paper checks when presented. Increased imaging clarity, widespread use of the Internet and changes in banking regulations enabled financial institutions to keep up with the rest of their business needs. Cash flows more steadily and there are fewer defaults on payments due to late receipt.

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Electronic funds transfer is defined as any transfer of funds that occurs in a paperless manner. This includes that transactions that take place at a point of sale system in a retail store, as well as transactions that take place online, via telephone, or by fax. These payments utilize EFT processing to ensure the money is sent to the correct account quickly. This term is often used synonymously with ACH processing.  The ACH or Automated Clearing House network operates on a batch-oriented funds transfer system. It uses the Federal Reserve Bank’s network to receive and transmit files through its various associations so that payments made from one account are deposited into the intended account.

The file contains information pertinent to the transaction so that there is proper documentation of the process and confirmation that it was received. There are many ways that EFT processing can be used to improve cash flow and reduce expenses. Using the paperless method, the risk for processing checks is dramatically reduced. If the funds are verified in the account, the entire transaction can be completed with only a small charge. This is several days faster than if a paper check was used. If there are insufficient funds, the transaction is not attempted and the check is returned.

This saves money in bounced check fees as well as the personnel required to settle the account. The advantage for EFT processing for checks is that they are posted before paper checks. This means the electronic version will receive any funds in the account first, reducing the number of returned payments. Electronic payments can be submitted automatically up to three times, increasing the chance of collection in a shorter period of time than if attempted by other methods. Having payment entries automated cuts down on data entry errors, decreases the total transaction time and saves money on the personnel required for the task.

Payroll costs are reduced and the recovery of funds is achieved in a significantly short period of time. By taking advantage of EFT processing, businesses are able to collect funds faster and spend less to do so. However, it is not only on the payment side of the transaction that funds are saved. Administration expenses are drastically reduced as invoices and payment notices can be sent automatically at pre-determined timeframes. There are no invoices to be printed, envelopes to be stuffed or trips to the post office required. This helps businesses control their expenses and operate more efficiently.