Check 21 Payment Processing for High Risk Merchants

Check 21 is a fast, safe 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 high risk internet merchants to process electronic checks and avoid restrictive ACH rules regarding chargebacks and returns.

Check 21:  Secrets of Electronic Checks

Electronic checks account for up to 30% of internet payment transactions.  Yet, high risk merchants often have a difficult time complying with the NACHA regulations to keep revoked transactions (chargebacks) under 1%.

Any merchant that expects higher than 1% revoke rates is wise to consider Check 21 instead of ACH processing.  Merchants that prefer not to have to comply with NACHA regulations discover Check 21 electronic checks are an excellent alternative.

Merchants in high risk categories find Check 21 particularly beneficial technology for processing electronic checks.   Check 21 electronic checks accounts can be approved for industries that do not qualify for ACH processing accounts.  For example, online pharmacies and debt consolidation firms, among others, use Check 21.

Check 21 electronic checks processing permits a wide of transaction types to be sent electronically, expanding your target markets.  Check 21 processing includes transactions 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.

Check 21 Protects Merchants

Check 21 increase merchant processing options beyond the limited ACH network.  And Check 21 electronic checks offer added protections to merchants.  Check 21 electronic checks are not subject to the same rules as ACH transactions.

Check 21 transactions are governed by check laws, and the Uniform Commercial Code, not ACH 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 electronic checks, 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.

This expanded descriptor makes is easier for buyers to remember what was purchased via Check 21 transactions and lowers the risk of chargebacks.   With ACH, transactions are displayed only as a line item on the buyer’s bank statement, leading to confusion about the purchase and resulting in higher chargebacks.

Check 21 Processing Saves Money

Businesses using Check 21 save money on payment processing fees.  Rates for Check 21 processing are less than fees for credit cards.

Check 21 electronic checks are s fast growing alternative payment option for internet and mail order / telephone order merchants.  With Check 21 technology, businesses can take advantage of electronic checks payment processing to power business growth, increase sales, reduce operating costs, and maintain a competitive edge.

For more information on how Check21 can help your business grow, contact info@nationalach.com

High Risk Processing: What You Need to Know

What You Need to Know about High Risk Processing

Benefits of High Risk Processing

High risk processing with electronic checks gives companies a competitive edge, expands market reach, reduces shopping cart abandonment and enhances customer satisfaction.

• Alternative Payment Choice.  Electronic checks are the most popular alternative payment option for ecommerce merchants.   More than 20% of online businesses already offer echecks as a payment method.
• Competitive Necessity.  If you don’t offer echecks you lose sales to competitors who do.
• Rescue Sales. If a card is rejected, echecks lets you rescue sales that otherwise would be lost.
• Decrease Payment Processing Expenses.  When buyers buy with echecks, merchants save money because processing fees are much lower than those charged for credit cards.
• Get More Buyers.  Over 75 million Americans do not have credit cards. Yet 90% of Americans have a checking or savings accounts and can pay with echecks.

What Industries are High Risk Processing? Certain types of businesses are automatically classified as high risk accounts.   These  have little to do the specific information about a particular company.  Rather, the classification categories are associated with general industry types.

Examples of industry classifications which fall into high risk processing categories include:  adult entertainment, call centers, travel, nutritional supplements, and certain segments of internet ecommerce.

High risk processing accounts may or may not have a different pricing structure than non-high risk processing merchants.  The specific pricing structures is determined on an individual company basis.

In the broadest terms, non-high risk processing accounts generally pay a pay a flat rate per transaction whereas a high risk processing rates are assessed a discount rate in addition to a transaction fee.  But, high risk processing merchants can obtain flat rate pricing if the business model and company history supports this option.

High Risk ACH Processing with Check 21

High risk processing may bypass the ACH payments network altogether and use Check 21 technology instead.  Check 21 processing is often used for merchants that cannot comply with NACHA for chargebacks to remain under 1%.

Check 21 for high risk ACH processing gives merchants greater flexibility to relationship to consumer chargebacks or revokes.  Check 21 operates outside of the ACH network and is not subject to NACHA rules.

Many high risk processing merchants take advantage of both the ACH network and Check 21 technology and have more than one account, depending upon the needs their business operations.  For example, for a recurring billing model, first time transactions for can be processed using Check 21 technology and recurring payments through ACH processing.

High risk processing accounts are usually established through a 3^rd party processor. The number of 3^rd party high risk processors has declined significantly within the past few years but there are still some good options available.

High Risk Processing Increases Sales High risk processing with echecks is an easy way to capture additional sales from buyers that do not have credit cards or simply prefer to pay by electronic checks.    Echeck transactions debit funds from the buyer’s bank account and automatically credits the funds to the seller’s account.  Companies that add electronic checks experience sales “lifts” of 8-20%.

For more information visit nationalach.com/services/high-risk-processing or

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Electronic Checks Increase Cash Flow

Accept Echecks to Get More Sales

Accept checks online to expand market reach by capturing sales from buyers who do not have cards, are maxed out on cards, or simply prefer to pay check.

Electronic checks debit funds from your buyers’ checking or savings account and automatically deposit the money into your business bank account.

How Do Electronic Checks Work?

At checkout, the buyer enters bank routing & account information rather than card data.  The buyer clicks a button authorizing you to debit payment from the bank account.  

Consumer authorization may be done online, over the phone, or by written authorization.  Confirmation of the payment is sent to the customer.

Electronic checks are cleared through the Federal Reserve.  Files may be submitted to the Fed either through the ACH payments network or via Check 21 bank-to-bank image transfers.

Quick Facts about Electronic Checks

•  Electronic checks are excellent for recurring billing models such as bill payments, subscriptions, memberships, utility bills, and charitable contributions.
•  Electronic checks are reliable, accurate, on time and confidential.
•  For billers and retailers, electronic checks improve cash flow, reduces days outstanding, and helps boost profit margins.
• Problems with electronic checks are rare.  The electronic funds transfer system is one of the safest and reliable in the world.
•  More than half of all U.S. households use electronic checks for one or more bill payment each month.  Over 90% of consumers who use electronic checks report high satisfaction with the payment option.
• Electronic checks save companies an average of 11.5 cents per payment (versus paper checks) in reduced processing costs.

Conclusion

Alternative payments such as echecks are the fastest growing way to pay online. Electronic checks are a trusted and familiar payment method used by millions of Americans.

To increase sales, accept checks online. And watch your profits grow.

Are you interested in an echeck account?

Contact info@nationalach.com today