eCheck2000

A National Payment Processors Inc. Company.                                Simplifying Payments — Electronically
This article was printed from http://www.echeck2000.com/News_BOC.asp on 1/7/2009 9:23:55 AM

ACH Industry News

 

NACHA Rule Change -September 2007


Business Check Conversion to ACH Transactions

 

Effective September 21, 2007

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Beginning September 15, 2006, the ACH NACHA Rules will allow certain business checks to be converted to ACH transactions.

Business checks that can be converted to Accounts Receivable Conversion (ARC) or Point-of-Purchase (POP) include business checks that do not contain an Auxiliary On-Us Field and are for dollar amounts up to $25,000.

Biz ARC Check

Business Check Conversion Basics

Many businesses are now converting paper checks to ACH debits to increase operating efficiencies and decrease costs. The process is known as "check conversion" and this conversion is initiated either at the point-of-sale (making a purchase in a store) or at a "lockbox" facility (for checks received by U.S. mail or at a dropbox location). Consumer and business checks may be eligible for conversion.

The MICR line at the bottom of eligible checks is read using a scanning device to convert the check into an ACH transaction.

Frequently Asked Questions

What is the Auxiliary On-Us field?

The Auxiliary On-Us field is an optional field on a business size check's MICR line (the line of numbers at the bottom of all checks). If a check includes an Auxiliary On-Us field, this information will appear in the leftmost position of the MICR line, before the routing number field. The check serial number usually appears in this field.

If an External Processing Code (EPC) is included in the MICR line, the Auxiliary On-Us field will appear to the left of it.

Does my check have an Auxiliary On-Us field?

Standard 6-inch checks do not include an Auxiliary On-Us field. Six-inch checks are often referred to as 'personal checks,' although many businesses also use them.

Longer checks may contain the Auxiliary On-Us field, but they don't have to. Look to the left of the routing number. In general, the longer checks -- which may include the Auxiliary On-Us field -- are used by corporate treasury, purchasing, and accounts payable departments.

My check has an Auxiliary On-Us field. Can it be converted?
If this field is present, the check is ineligible for conversion. If you want to have your checks converted, you must request check stock that does not include this field.
My check does not have an Auxiliary On-Us field. Can I still opt out of check conversion?
Yes. If you are writing a check to a business that will be converting at the point-of-sale you will need to pay with a different form of payment. If you are writing a check to a business that will be converting the check under the ARC rule, you will need to contact that business to opt out. Also, be aware that checks in an amount greater than $25,000 cannot be converted, even if you do not specifically opt out. For a more permanent - and easier - solution, you can order new check stock from your check printer to acquire checks with the Auxiliary On-Us field on them.
What will happen to the original check after conversion?
After ARC conversion, the original check is destroyed within 14 days. Destroying the original check is a safeguard to avoid duplicate presentments. For POP conversion, the original check must be marked as processed and handed back to the payer at the point-of-sale.

What can you do if your business checks are ineligible but are converted anyway?

If you identify an ineligible check that has been converted, the ACH item can be returned using a new ACH Return Reason code, R39 - Improper Source Document. In order for us to process that return in time for the two banking day requirement, the return request must be received by our ACH Operations no later than 2:00 p.m. Eastern Time on the day after settlement. If it is beyond the two business days, but within 60 days from the settlement date, you can complete a Written Statement Under Penalty of Perjury requesting that the item be returned as unauthorized. In either case, you can contact our ACH Customer Service at 800-979-2242.

How will Stop Payments work? Will my company still be protected?

Your company will still be able to place a stop payment on the original transaction. Your company will need to place the stop payment before the item has been presented for payment to us. eCheck2000's stop payment system interrogates converted check items that process as ACH transactions. If a stop payment was placed but did not stop the transaction, you should contact your ACH Client Services Manager immediately.

How will this work with ACH Debit Authorization blocks and filters?

If you use debit blocks on your account, all converted check transactions will automatically be returned to the company to which the check was written and the payment will not be processed. If you use a Debit Authorization service on your account, the ACH debit will be processed according to your account set-up.

 

Please contact your eCheck2000 Account Manager of more details. 800-979-2242.

 

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