High Risk ACH Processing Compared Echecks

High Risk Merchants Prefer E Checks

In the US, there are two methods of debiting a bank account.  First is ACH debits, which process transactions through the Automated Clearing House network.  The second is echecks, which processes payments via bank-to-bank transfers.

Many merchants who were using high risk ACH processing are moving away from ACH payments and are using echecks instead.  The reason for the change is that NACHA is changing the rules regarding the number of returned transactions that are permitted to flow through the ACH network.

Beginning in September 2015, the threshold for unauthorized returns (also known as revokes or chargebacks) is being lowered to 0.5% from the current from 1%.  Returns for administrative or account-data errors must be no greater than 3%,   In addition overall returns for any reason must not exceed 15%. 

If return rates go over the levels, ODFIs risk investigation or enforcement proceedings.  The proceedings includes an 8 step process that examines every part of the banks’ ACH processing. 

Let’s get real.  How many ODFIs do you think are going to be willing to risk an examination?   In reality, most banks will get rid of high risk ACH processing merchants rather than take any chances.

Echecks Different than High Risk ACH Processing

The user experience with both ACH processing and echecks is the same. The customer provides bank routing and account number information and authorizes the transaction.

The difference is on the back end processing. 

With ACH, transactions clear through the ACH network.  Therefore, the transactions are subject to NACHA rules. 

Echecks are cleared through bank-to-bank data exchange.    These transactions are governed by the UCC and long-standing laws regarding checks.

As a result, echeck transactions do not need to adhere to the tight and rigid rules governing ACH payment processing.  There is substantially more leeway for returned and revoked transactions.

How High Risk Merchants Set Up E Check Processing

The application for electronic check processing is very simple.  You submit an application along with supporting documents.   Allow 5-7 business days for the account to be activated.  Then you’re good to go.

You can integrate echeck processing with your websites via an API to accept checks online.  You can accept check by phone, mail and fax orders using a virtual terminal.  And you also have the option of uploading batch transactions through a secure FTP site.

Are you a high risk merchant that wants to increase profits with echecks?

Contact info@nationalach.com today.

Online Money Transfer ACH and Check 21 Processing

ACH and Check21 echeck processing service for online money transfer companies.  US customers can quickly and easily send payments using a direct debit from their bank account.

The World Bank reports that money remittances were $436 billion in 2014 and will increase to $518 billion by 2016. The majority of the payments are sent by migrants to families left back home.

Payment Processing and Online Money Transfer Platforms

Integration to your online transfer processing platform is accomplished via an API. All transaction, management, and reporting functions will reside on your system, simplifying account reconciliation. Virtual terminals and batch uploads to a secure FTP site can also be provided.

There are two methods of debiting a US consumer bank account. One is through the ACH network. The second is through Check 21 technology.

Many online money transfers companies are moving to Check 21 processing.  Check processing is quicker to setup. And Check 21 requires far less paperwork to establish an account compared to ACH processing.

Comparison of Check 21 echecks with ACH

The end result of both eCheck21 and ACH processing is the same. Money is debited from US consumers’ accounts and settled to the online money transfer company account.

The chart below shows the benefits for money transfer companies of  Check 21 compared with ACH payment processing.

eChecks on the Checkout Page

On the checkout page, your customer selects “pay with echeck” option. Customers enter the transaction information, including name, address, and account information and hits the “submit” button. Digital signatures can be used as an additional security feature for online payments, although this is not required for processing.

Electronic checks are a trusted way of making payments online. Any customer with a US bank account can send money. Rates for echecks are much less than for card transactions and are the preferred method of payment for most money transfer firms.

Are you an online money transfer company that wants to accept echecks?

Contact info@nationalach.com today

Echeck Alternative to ACH Payments

Why You Need an E Check Processor 

The ACH network is reliable & safe.   And remains a good choice for echeck processing for merchants that have low return rates and few revoked transactions.

Yet, new regulations from NACHA  have many companies scrambling for viable alternatives to the ACH network for processing payments.   The problem became especially clear this fall after the new NACHA regulations came into play.

The new rules for ACH processing seriously limit the volume of returns & revoked transactions that can flow through a processing account.    Returns are now required to be less than 15%.  

And revoked transactions must be less than 1/2 of 1%.  Which is even lower than the 1% chargeback rate allowed by the card brands to maintain an card processing account.  

These restrictions have severely impacted merchants across all industries. Companies in high risk industries have been particularly hard hit because their business models often make it challenging (if not completely impossible) to maintain ACH returns and refund ratios.  

Alternative to ACH Payment Processing

Obviously, you want and need to continue to accept echecks as a method of payment.  Echecks are the most popular alternative payment option for US consumers.  

All US merchants are wise to accept both cards & echecks to boost profits.   And to satisfy the needs of your customers who expect to be offered multiple payment options.

For a long time ACH was the only technology used for processing electronic checks.  However, new technology based on Check 21 Law is increasingly popular. Echeck items clear through bank-to-bank funds transfer rather than through the ACH network.

Because the transactions do not clear through the ACH Network, echeck transactions are not subject to the rules and regulations of the ACH network. As a result, there is far greater flexibility in the number of allowed returns and revoked transactions than with an ACH processing account.  

The consumer experience with both ACH and echeck processing is the same. A routing and account number is obtained from the customer.  One time and recurring transactions are acceptable.  

Regardless of  technology, all an echeck really does is debit money from your customers’ bank accounts and automatically credits the funds to your business bank account.  

Echecks for Online Lenders, Collections, and High Risk 

High risk merchants that want to receive and send payments are finding it increasingly difficult to obtain processing accounts.  Most high risk merchants find it almost impossible to maintain the low return and revoke threshholds now set by NACHA for ACH payments,.  As a result, high risk merchants need to accept echecks rather than ACH payments.     

Risk in the payment industry is caused by a variety of factors, one of which is conflicting, or increasingly restrictive regulations. The legal aspect will most likely remain problematic for some industries, such as online lenders, where each and every state has its own rules.  

Rules vary by states and include items such as  caps on interest rates or loan amounts.  Some states, such as  Vermont and New York, banned this type of service entirely. Obtaining the appropriate licensing in all states where online lending can be carried out legally is an arduous and expensive process, while unlicensed lenders are heavily targeted by regulatory bodies.

In addition to these legal difficulties, online lenders have an image issue, as illustrated by a recent high-profile case involving a fraud scheme in which people were forced by a bogus online lender to pay debt that they did not even own. Even though these unacceptable practices are not inherent to the lending business, such incidents have a negative impact on the entire online lending industry.

It is precisely this type of situations that the Online Lenders Alliance is seeking to avoid by establishing a set of best practices and by offering resources to individuals who think they are victimized by dishonest online lenders and debt collectors.

Yet, despite all of these challenges, lenders, collections, and money service businesses all will benefit from using echecks.  As will companies in any industry that  wants to have maximum processing limits with flexibility in returns and revokes.

Conclusion

E checks give high risk merchants a proven method to accept checks online without worrying the changes in ACH processing rules.  Electronic checks are the perfect solution for companies that need greater flexibility on chargebacks and returns.  And an echeck account is easier to establish than high risk processing for cards.  

Are you a high risk merchant that wants to increase profits with echeck processing?

Contact info@NationalACH today.

Forex Merchant Account

Benefits of Echecks for Forex Merchants

Forex merchants report the following benefits from electronic check processing:

• Highly effective method to receive payments from traders
• Electronic check processor accounts are easier to establish than card payments
• Echecks are the most popular alternative payment for US customers. Millions of Americans regularly pay for goods and services with an electronic check. Familiar payment method trusted by clients.
• Accept checks online.  Accept check by phone, mail and fax payments. Multi-channel payments increase profits.
• Convenient for traders.  Profitable for you.  

Changes in Regulations Impact Forex Payment Processing

In the past couple of years, Forex merchants had to meander their way through increasingly restrictive regulations imposed by the National Futures Association (NFA). The debacle caused by the Swiss franc spike in January 2015 dealt a painful blow to an industry that still had to come to terms with a historic low in terms of assets value just a month prior.

According to the statistics provided by the US Commodity Futures Trading Commissions, the US retail FX client assets dropped to an unprecedented $551 million during the month of December 2014. The numbers released for the second quarter of 2015 confirm the same trend.

The inherent volatility of forex trading combined with progressively stricter regulations turned the US market into a difficult business environment for forex brokers. One of the significant rule changes that took place last year was the enforcement of a ban on the use of credit cards in funding forex trading accounts.

After a detailed analysis of the business practices of forex dealers, the NFA noticed that many inexperienced traders recklessly used their credit cards and frequently lost money that had been borrowed on interest from a bank. The change is supposed to discourage this type of risky behavior which is potentially catastrophic in terms of personal finances. The ban has been applied solely for credit cards; debit cards are still allowed.

ACH Payments & Echecks Instead of Cards

As it frequently happens in business, changes in card processing made it more important than ever for the Forex industry to offer additional payment options to customers.  

ACH payments & echecks are the most obvious choice. In fact, GAIN Capital started the trend when they announced in October, 2014, that they will make ACH payments available to traders, as a means to compensate for the credit card ban.  

The switch from credit card to ACH comes naturally in the context of the unquestionable popularity and reliability of the ACH network.  In addition echecks can be processed through bank-to-bank transfer based on Check 21 technology which allow for extremely fast clearing of transactions.

 The ease and accessibility of the payment process explains why customers are inclined to ACH and echecks more and more. Given the fact that companies in the Forex firms are often declined by payment processors due to the risk associated with the industry, it stands to reason that they should seek to reduce their dependence on elusive card payments.

Conclusion

E checks are a familiar and trusted method of payment for US customers. Accept echeck payments from customers to fund trading accounts. Payout customers with ACH credits. Gain a competitive advantage in the marketplace.  

Are you a Forex merchant that wants to accept electronic check payments?

Contact info@NationalACH.com

eChecks Increase Travel Merchant Profits

Accept Echecks to Get More Orders 

The more payment options travel merchants offer customers, the more sales will be made.

When you accept checks online, sales increase up to 30%.  You capture sales from customers who do not have cards, are maxed out on cards, or who simply prefer to pay you with an electronic check.

Echecks are the most popular alternative payment for US buyers.  If you don’t offer echecks, you are losing sales to your competitors who do.  

eChecks Benefits Compared to Cards

These days most travel reservations are made online. Yet, card processing is expensive and risky.  And travel merchant accounts are difficult to obtain and maintain.  

Travel businesses are considered high risk merchants for card processors due to the risk of chargebacks.  Travelers can chargeback a transaction for up to 180 days after the purchase is made.  

A chargeback can occur for actual fraud or for what is known as “friendly fraud”.  Friendly fraud is a greater risk for travel merchant credit card processing than actual fraud.

With friendly fraud, a legitimate transaction is disputed by the customer based on spurious reasons. Usually, the main reason behind the dishonest behavior is the intention of obtaining a refund for payments that cannot be refunded on request, such as a hotel reservation for which the customer never showed up. 

How E Checks Reduce Chargeback Risks

Echecks give you proven payment method to substantially decrease your risk for credit card chargebacks.  The more transactions you can process with electonic checks instead of cards, the fewer chargebacks will impact your card processing account.  

The chargeback period for echecks is 40-60 days (depending upon the method of processing the echeck).  Card transactions can be charged back for up to 180 days.  Therefore, your risk for contingent liabilities are significantly shorter with electronic check processing.  

And it is much more difficult for travelers to chargeback an electronic check transaction.  Travelers must contact their bank to dispute the transaction. Documents must be presented to prove the case.  Some banks require travelers to sign an affidavit.  

It takes a great deal of time and effort to dispute an electronic check transaction.  Far more than it takes to dispute a card payment where the traveler simply needs to call their issuing bank.  

Growth in Travel Industry

Whether it is a matter of entertainment, self-discovery, exploration, or relaxation, people love to travel.  In addition to leisure travel, many customers travel for business.  Travel is among the fastest growing industries in the world.

 The US Travel Association points out that the traveling industry is one of the biggest employers and the largest exporter of services.  In 2014 alone, the travel sector produced an economic output of $2.1 trillion, and its volume is expected to rise by 4.3 percent annually until 2020.

Travel  trends of 2015 show increasing use of mobile technology and social media. Other emerging trends will make long-haul traveling more tempting, and will improve customers’ experience through faster boarding and more comfortable plane seats.  

Conclusion

The key for any industry to achieve maximum profits is to meet customer demands.  American travelers expect to be offered different payment methods when booking online.  If you offer only cards, you are leaving money on the table. 

Electronic checks are a familiar and trusted alternative payment method. Millions of American travelers regularly pay for goods & services with echecks.

Accept checks online.  Accept check by phone, mail, and fax orders.   

Echecks are convenient for your customers.  And profitable for you.

Interested in finding out more about increasing your sales with echecks?

Contact info@nationalach.com today.       

Online Dating Sites Increase Profits with eChecks

Echecks Trump Cards for Recurring Billing

Online dating sites increase profits from recurring billing by offering echecks as a payment option.  When you accept checks online, members pay you from their bank accounts rather than with a credit card.  Echeck transactions are processed via ACH or Check 21 technology.

Echecks offer you significant benefits over cards.  When members pay with direct debits from a bank account, the lifetime value of customers increase.

Your members rarely change bank accounts.  It’s simply too much hassle since bank accounts are generally linked to direct deposit of payroll, payments of billing for household expenses, and subscription services.

Compare this with cards.  Each year more than 20% of cards are reissued due to expired dates, security breaches, and lost or stolen cards.  This requires an update of card information, which creates additional work for your staff.  Addtionally, members may need to be contacted to obtain the information, creating an unnecessary risk of cancellation.

Online Dating Growth

As most of our lives move online, it is not surprising to see that dating follows the same trend. The opportunity to find and interact with like-minded people easily, while preserving anonymity, is the driving force that pushes online dating into the mainstream of human experience. The extensive use of mobile technology and smartphones means that dating apps are accessible and can be used at all times.

Most importantly, the latest data released by Pew Research shows that attitudes toward online dating are changing, in the sense that finding a partner online is considered increasingly acceptable. More users that spend time online means bigger profits for dating websites, so it is not surprising that the entire industry is now worth over 2 billion dollars.

Online Dating High Risk Merchants

Despite positive changes to the industry, online dating websites still have an image problem. The industry as a whole is perceived negatively because users find themselves turned into targets for a variety of scams.

In addition, dating websites sometimes collect private information that can cause great damage to an individual if released to the public. One recent unfortunate incident concerning Friend Finder being hacked showed that privacy, so important in online dating, is not guaranteed.

Echecks Increase Profits

Online dating websites often find it challenging to find a payment processor  to offer a merchant account for credit cards. This happens mostly because the chargeback rate is high, especially when the amount is collected through recurring billing.

In addition, some customers may not feel comfortable with providing their card information for this type of service, or they may not even own a card. As a result, the best way to circumvent the whole problem is to make alternative payment methods available on the website.

Echecks  are the best option due their popularity, ease of use, reliability, and less stringent chargeback rules. Websites that have a business model based on automatic renewal will find electronic check payments considerably more dependable because the payment information does not have to be updated periodically, as it is the case with card payments.

Conclusion

Offering echecks as a payment option at checkout results in immediate profits.  The more way customers have to pay you, the more sales will be made.

Echecks increase the lifetime value of your customers.  Payments are continue month after month, with no need to update payment information.

Are you an online dating site that wants to increase your profits by protecting recurring payments cash flow?  

Contact info@nationalach.com today