Posted by NationalACH on Dec 09, 2022
Check 21 for High-Risk Merchants

Check 21 has become a generic term.

When considering Check 21 processors, it’s important to understand the check clearing process being used on the back end.  High risk merchants need to pay special attention to the type of Check 21 service being offered since high-risk merchants have far different requirements for electronic check processing than do low or standard risk merchants.

Best Way for High Risk Merchants to Process Echecks

A special platform for processing Check 21 transactions is available for high-risk merchants.  The processing method protects your business bank operational account.  And permits higher returns and revokes than any other payment method.

NationalACH is among the only companies in the US that offers this unique service.   

The processing platform has ten banks connected to it.  Assuring you always have the processing capacity you need.

  • X9 files associated with Check 21 processing are submitted directly to the Federal Reserve to clear.
  • Returns & revoked transactions are sent back to the processor’s account.
  • The processor assumes the liabilities for returned & revoked transactions instead of you.
  • The processor settles cleared funds settle to your bank account, like the way card or ACH payments are settled.  The only transaction your business bank sees is an ACH credit of the settlement funds.
  • Protecting your business operating account from returns or revoked transactions.

Substitute Checks Do Not Work for High-Risk Merchants

Most “Check 21” processors are simply creating “substitute checks” which are sent to your business bank for clearing.  This works okay only if your revoked and returned transactions are quite low, which is seldom the case for high risk merchants.

Substitute checks can be effective for low-risk businesses. For example, insurance, utilities, or online bill pay companies have very low return rates or revoked transactions. People rarely bounce electronic checks used to pay household bills  Revoked transactions seldom occur since consumers do not dispute electric, water, gas, mortgage payments, car loans, or other bills. 

However, for high-risk companies, substitute checks are not a good option.  When a business bank sees returns and revoked check transactions running through a business operating account, the account is red flagged.  Which can result in your business operating bank account being terminated. 

Another big draw-back of substitute checks is that several major US banks do not honor substitute checks and automatically return them as “Return to Maker”. As a result, more returns flow through your bank.  Increasing your costs.  And further jeopardizing your business operating account. 

How Check 21 Compares to ACH

ACH is a good solution for merchants that can comply with the rules of the ACH payment processing network.  And same day ACH, payments can be debited from customers’ bank accounts the same day if the transaction is submitted by cut-off time.

The biggest issue with ACH for many standard and high-risk merchants is that NACHA, the governing body of the ACH network, does not allow revoked transactions to exceed 0.5%.  This is half the number of chargebacks permitted by card brands.  Making it very hard for merchants to stay compliant with ACH rules.

However, ACH echecks are a great solution if your revokes are less than 0.5% and returns are under 15%.  ACH is reliable, inexpensive and is a better solution than substitute checks for low & standard risk merchants that can comply with ACH requirements. 

Benefits to High Risk Merchants

Using a specialized Check 21 processor is the best echeck solution for high-risk merchants. 

  • All transactions clear through the processor, who assumes liability for the revokes and chargebacks. Protects your business operating account.
  • Ten financial institutions are integrated with the platform, assuring continuity of processing.
  • Higher revokes and returns are allowed than with any other way of payments. No worries exceeding card or ACH ratios and jeopardizing your existing merchant accounts. 
  • Unlimited processing volume. Once your account is approved, you can process as much volume as you need. 
  • Process any way you want. Accept orders online with API integration.  Accept phone or mail orders easily.

Applying for a Check 21 eCheck Merchant Account

Applying for an account is like applying for any other payment processing method.  An application is submitted along with information about your company.  The account is underwritten and approved.  And you are ready to go. 

Supporting documents include  Color copy of ID for signer on account, bank statements, processing history, voided check from depository account, and business formation documents.

After the application package is submitted, the underwriting team verifies the information on the application form.  Then, supporting documents are reviewed.

For online payments, review your site.  Make sure all pages are displaying properly.  Clearly display privacy, returns, shipping, customer service contacts and other pertinent information. 

For merchants without websites, include marketing materials, pricing lists, sample of sales agreements or an executive overview in your application package.  This helps underwriting understand what is being sold and the terms associated with the purchase.

Underwriters conduct internet searches and BBB for reviews on a company or owners.  During the application process, do a search yourself.  If you encounter negative comments, respond in a polite & professional manner, which demonstrates to the underwriting team that you care about customer service.

When your Check21 merchant account is approved, a merchant account identification number will be assigned, and credentials issued to you. You can begin processing immediately.

Accept Check 21 Payments Through All Sales Channels

The more ways you accept payments, the more orders you will receive.

Integrate Check 21 payments with a simple-to-install API.  Easily accept orders from your site and through mobile devices.

Unlimited virtual terminals are available for mail & phone orders (MOTO), unlimited virtual terminals are included with all Check 21 merchant accounts. 

For businesses that process bulk orders, files can be securely batch processed.  This is a good solution for high volume processing of large order files. 

Online cloud reporting allows you to track all transactions in real time.  Management reports can be customized and are available in a variety of formats.

Import and export transactional data to your internal business systems. Smooth exchange of payment data streamlines business operations and enhances productivity.


Special method or processing echecks protects you and your business.  Take advantage of the higher revokes and returns than permitted by any other payment method.

Interested in more information?  Love to hear from you.  Contact us today