Check 21 is a fast, safe, low-cost method of processing check payments. With Check 21, transactions are cleared using bank-to-bank image exchange rather than through the ACH network. Check 21 is an attractive alternative for internet and MOTO merchants to process electronic checks and avoid restrictive ACH rules regarding chargebacks and returns.

Check 21 is also effective for converting paper checks to electronic images for clearing and settlement in a process known as remote deposit capture. With remote deposit capture merchants scan paper checks. The scanned images are submitted as electronic transactions. Merchants do not need to deposit paper checks in the bank once images are submitted electronically.

Check 21 remote deposit capture allows 3rd party checks, corporate and government issued checks and money orders, as well as personal checks, to be converted to electronic transactions. All Check 21 transactions clear through the Federal Reserve Banking system.

Check 21 payment processing permits a wide of check types to be converted to electronic transactions. These include checks from institutions that do not participate in the ACH network such as credit unions, savings & loans, small banks, brokerages, and checks drawn on credit card accounts.

Benefits of Check 21

• Faster access to money. Get your money faster. Quick settlement translates to increased cash flow access to working capital for your business. Next day settlement is available.
• Extended file submission time. Check 21 files can be submitted for clearing as late as 8 pm EST compared to 4 pm for ACH files.
• Decreased fraud risk. Shorter clearing times offer better protection against check fraud.
• Full online reporting. A vast array of management reports can be compiled quickly.
• Banking Independence. No new bank accounts are required. Use any financial institution as a depository account for the ultimate in flexibility.
• Saves time and money. Businesses using remote deposit capture eliminate time-wasting trips to the bank and save transportation costs.
• Increase productivity. Remote deposit capture eliminates the error-prone manual labor of check preparation. Automating check deposits accelerates the smooth flow of your business operations.

Check 21 Modernizes Check Processing

Check 21 brings modern technology to check systems, expanding merchant processing options beyond the limited ACH network. Internet and MOTO merchants discover Check 21 processing is an excellent alternative to restrictive ACH regulations.

Point of sale merchants take advantage of image based technology by converting all types of paper checks to electronic transactions. Remote deposit capture electronically transmits consumer, government, corporate, third-party checks and money orders to be processed via Check 21.

Check 21 processing is governed by check laws, and the Uniform Commercial Code, not ACH NACHA regulations. This reduces merchant risk from contingent liabilities. For example, under NACHA rules, consumers have 60 days from the date they learn of a questionable transaction to dispute it. With Check 21 processing, consumers have only 40 days to dispute a transaction.

Check 21 transactions appear on the buyer’s bank statement in the same place as a paper check transactions. Merchants can display purchase details on the bank statement, making it easy for buyers to remember what was purchased. Compare this with ACH transactions which are displayed only as a line item on the buyer’s bank statement, leading to confusion about the purchase and resulting in higher chargebacks.

Limitations of ACH Check Systems

Electronic checks account for up to 20% of internet payment transactions. Yet, merchants offering electronic checks payments for internet or phone orders may have a difficult time complying with the restrictive NACHA regulations regarding chargebacks and returns. If a merchant fails to comply with the repressive rules, an ACH payment processing account may be terminated.

Merchants with retail operations also need check payment processing alternatives. Money service businesses (MSB), check cashing outlets and convenience stores all cash third party payroll checks. Wholesalers, distributors, commercial property managers, rental companies, insurance and medical firms all accept corporate and government issued checks. These types of paper checks cannot be converted to electronic payments through the ACH network.

Establish Your Check 21 Account with the Experts

Establishing your Check 21 account with NationalACH guarantees proven reliable payment processing. Each client receives personalized attention from professionals who are committed to understanding your business and recommending the best solution for your needs. Superb customer service, superior payment processing, and competitive rates assure your complete satisfaction.

Case summaries

• Money Service Business (MSB). Payroll check cashing. The merchants’ local bank increased prices for processing paper payroll checks. Remote deposit capture reduced transaction fees and eliminated time-wasting trips to the bank.

• Wholesaler selling restaurant suppliers via internet, catalogue, and customers also can visit the warehouse to make purchase. 83% customers pay by check. Average ticket is $900. It was taking 4-7 days for checks to clear. After implementing Check 21, settlement time for cleared checks dropped to 1 day. As a result, the company has as use of its funds 3 -6 days sooner than before.

• Merchant selling home cleaning supplies through infomercials. Payment by electronic checks accounted for 9% of transactions. Chargebacks and returns were relatively low but still beyond the level permitted by NACHA and the merchant could no longer use the ACH network. The merchant says chargebacks and returns have decreased by 5% in the past 6 months since the implantation of Check 21 processing. He believes this is partly due to the additional information about the purchase that is displayed on customers’ bank statements.