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High-Risk Check Processing

July 20, 2021 • by jclarknationalprocessing-com

Estimated reading time: 2 minutes

The purpose of any business, regardless of its nature or size, including non-profit organizations, is to turn a profit, which basically means more money comes into the business than goes out.

One way of making a profit is to expedite the way a customer can pay for goods and services. This motive resulted in the innovation of high-risk check processing. This electronic processing method is considered a substitute for the slower and more thorough Automated Clearing House payment network.

Check Clearing for the 21st Century Act

The need for this type of system resulted in the “Check Clearing for the 21st Century Act.” This is a government regulation to expedite the process of gathering, processing, and disbursing electronic checks between United States banks. It enables high-risk checks to be moved through the banking system relatively faster. The colloquial name for the decree is “check 21,” and the electronic devices used to process it are referred to as “check 21 processors.”

In banking and merchant circles, Check 21 is somewhat of a revolution in how business is conducted. It changed the conventional check clearing process. Now it’s possible for a paper check to be transformed into an eCheck to speed up clearing and disbursing funds. Check 21 accounts now allow merchants more efficient solutions to meeting customer needs and processing payments.

Benefits of Check 21

Overall, the Check 21 system has also had a beneficial effect on vendor-merchant and merchant-customer relations because it has simplified the transactions and financial procedures between them. One example of a benefit is that a merchant can now receive payment from a customer who does not have a credit or a debit card.

Fraud Protection

Another benefit is that the cost and time of facilitating and collecting payments are greatly reduced. Should there be anything fraudulent in the transaction, the check 21 processing system makes it much more obvious a lot faster. All these advantages have meant that the check 21 system has become popular and more prevalent.

The new processes can be incorporated into existing automated payment systems, working with existing computer technology. In addition, more providers are available for merchants to select and rates for these services have become increasingly affordable. Merchants have more choice in rates, quality, and types of services offered by providers. The check 21 ruling has made financial transactions quicker, cheaper, and easier for all parties.

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