Posted by NationalACH on Mar 07, 2014
debt collector payment processing

Improve Cash Flow with Electronic Checks

Echecks are a necessary component to maximizing the revenues of debt collection agencies.  Once a debtor agrees to pay, echecks help you collect the money quickly and easily.

The debt collection industry is worth up to $17 billion, with millions of Americans owing money.  Yet it is getting more difficult to collect from debtors; agencies have to work harder to get debtors to pay up.

Consumers are complaining about aggressive collection efforts in record numbers.  The Federal Trade Commission is imposing fines on agencies that violate the Fair Debt Collection Practices Act.

When a debtor does agree to pay getting the money rapidly is crucial to bottom line profits. Echecks deliver more revenues to your firm and a steadier source of income than any other payment method.  Echecks can be used either for one time payments or to collect on a recurring payment schedule.

Echecks Better than Cards

While some debtors agree to pay with credit cards, accepting card payments is risky for collection agencies.  Collecting debt by incurring more debt on cards is frowned upon by the card brands.  Consumers can charge back transactions for up to 6 months.  And, rates for processing credit cards are high, cutting into profit margins.

In addition, more than 20% of all cards are reissued every year.  Updating card payment information when a card is reissued is time-consuming and often involves contacting the debtor again.

Cash flow is more stable when a debtor pays with an echeck.  Bank accounts are seldom changed, eliminating the need to update payment information.  Revenues from both single and recurring payment plans are more secure.  And payment processing rates for echecks are substantially lower than for cards.

eChecks:  ACH and Check 21

Echeck accounts are established using both ACH and Check 21 technology.  Both technologies provide similar user experiences.  The choice on which to use depends your business.

ACH regulations require chargebacks to stay under 0.5%.  For companies that have chargebacks higher than 0.5%, electronic checks that use Check 21 technology is the way to go because it allows greater flexibility for chargebacks.


Card accounts for debt collection agencies are getting increasing difficult to obtain. Electronic check processing is far more effective for the recurring billing model used by debt collection agencies.

Accept checks online. Accept check by phone, mail, and fax payments. Reduce processing risk while increasing profits.

Are you a debt collection agency seeking an electronic check processor?

Contact today