Terminology is a must have in the banking world. The biggest term that has come around recently is Automated Clearing House, or ACH. This term has probably appeared on your bank statements as ACH processing. The question on everyone’s mind is: What exactly is ACH processing. Below is some basic information about it, and how it has changed the way banking is done.

ACH Processing is all about the electronic transfer of money from one place to another. The time it will take to get from one destination to another used to be depend completely upon mail. Not anymore. With everything going electronic, payments are instantaneous.

With Automated Clearing House, everything is done electronically. This means that paper checks are becoming a thing of the past. Credit and Debit cards are the main reason this type of processing has become so popular. It is much easier to send money electronically than it is to write out a check in today’s society.

Direct deposit is another advantage to going digital. Direct deposit has not been around forever. Employers enjoy the idea of being able to have their pay companies send their employees’ checks directly to their financial institution. Employees love the convenience of not having to pick up a paper check. It is easier for them to be able to pay their bills on time that way.

Electronic money management has also helped the environment. Most companies and banks encourage their customers to go paperless. This solves two problems. One problem is the amount of mailing that must go out each month. Going paperless allows them to save money on postage. The second thing it solves is making it possible to save trees.

In today’s busy world, it is much easier to send payment via the Internet. Customers enjoy the convenience of being able to click a few links to have their bills taken care of. It allows them to keep track of their money in real time. Online banking is also made possible due to digital banking.

Debit and Credit card companies are also benefiting from the rise of the electronic age. They are able to keep their customers’ accounts up to date much easier. They can give their clients instant information that was not available before. This has made using credit cards more efficient for everyone.

This is just some general information about how Automated Clearing Houses work. To find out what exactly is ACH Processing, it is suggested you go to your banking expert. They will be able to give you a clearer idea of how it works. It will really make you think the next time you pay that bill online.

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.

For more information please contact us at 800-720-3323 or at www.nationalprocessing.com

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.

Check 21 is one of the most well-known electronic fund transfer solution that you can add to your payment system. This is essentially an online checking system that allows businesses to process credit card and check transactions without the headaches. But this payment solution is not just about convenience. Using Check 21 will also reduce your total processing costs that may include card transmission and chargeback charges. To use this payment system, all you need to do is make a digital or virtual check to be drawn against your customers’ bank accounts. You will then request your bank for verification and when the check has been cleared, you get the funds in your own account.

By not requiring paper checks, the Check 21 system eliminates the need for cleared checks to be returned to the bank account holder, who is none other than your customer. This payment method also allows you to remote deposit funds into your own merchant account. With remote deposit, you can simply scan images of your customers’ checks and then electronically deposit them into your account. Check 21 makes it possible for businesses like yours to credit payment from customers within the same business day that the digital checks are electronically deposited. In short, both you and your customers enjoy unprecedented convenience.

Moreover, since Check 21 is electronically processed, merchants are also notified about returned items faster. Typically, within one business day, you will be informed about returned items, if any. Chargebacks are minimal because, to begin with, processing costs are lower than conventional payment methods. Compare that with the traditional paper-based payment processing, which can produce notifications on returned items only after seven days at the earliest. Needless to say, when you add Check 21 to your payment system, you also get easy access to important transaction data, payment status, and digital images of your customers’ checks.

Indeed, Check 21 payment system is another electronic fund transfer system that exempts you from making trips to your bank and physically depositing the checks that you receive from your customers. And if you are concerned about the security of your payment transactions, you have nothing to worry about since all the transactions will be processed in a secured Internet-based platform. Check 21 removes paper checks from your business operations while giving you a better control of the funds that will be credited to your account. So what are you waiting for? Add a more efficient way to accept and deposit checks to your business now.