Check 21

Check 21 Payment Processing

If your business exceeds the ratios for returns and revokes set required by the ACH network, Check 21 is a good option for you. Check 21 is a broad term used to describe processing which clears transactions through bank-to-bank file transfer rather than through the ACH network.

Check 21 and ACH are both used for web and phone transactions as well as one-time and recurring debits from bank accounts. The user experience for Check 21 and ACH is the same. Customers pay you with an echeck by providing bank routing and account numbers rather than card information. 


Understanding Check 21

Check 21 was initially used to scan paper checks to electronic images in a process called remote deposit capture (RDC),  Today, many banks let you take pictures of a check on a smart phone & deposit the image electronically. 

The use of Check 21 has changed in the last several years to include processing transactions which are initiated by the consumer in an electronic fashion rather than with a paper check.

Some ACH processors create “substitute checks” which are sent to your business bank for clearing.  This is a good way to process if your revoked and returned transactions are very low.  For instance, bill payments or other low risk transactions can be processed using this method quite successfully.

Yet, many merchants have issues with substitute checks.  Business banks get concerned when returns and revoked transactions appear in a business account, which can lead to a cancellation of the account.

A Better Way to Process Check 21

Clearing Check 21 transactions a third-party processor is a much better solution Transactions remain in an electronic file format.  Substitute checks are not created. Instead, the processor submits an electronic file of the transactions..

Cleared funds are settled back to the processor who in turn settles them to your bank account.  The only transaction your business bank sees is the cleared funds settled to your account, thereby, protecting your business bank account.


What Form of eCheck21 is Right for You?

Before applying for an echeck21 account, your representative will discuss the particular requirements of your business with you.

If you are processing paper items, scanning checks via RDC a good solution.

If you take MOTO or web orders and have low revoke/return rates, clearing substitute checks through your own bank account is an option.

And if you want the benefits of end to end electronic clearing through a bank or processor account with settlement of cleared funds to your business bank account, RCC, RCPO, or ICL is the best choice.

Once you decide on the right option for your business, applying for an account is straight forward.  You submit application along with supporting documentation. Account approval takes 5-7 business days.

Transactions can be submitted in three ways.  API integration for web orders, virtual terminals for MOTO, or batch uploads to a secure FTP site.

Convenient online cloud reporting is a standard feature for all accounts.  Transnational data is simple to import and export to your internal business systems.

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