ACH/eCheck Processing
There are three basic types of check services performed by the system:
- Verification/guarantee
- Truncation/conversion and
- ACH processing, also known as direct debit.
PAPER CHECK HANDLING:
Verification / Guarantee
The “verification” service will verify that the check writer is not in the “known bad check writer” database. The “guarantee” service guarantees that the check service provider will reimburse the merchant for any returned checks and perform collection on the merchant’s behalf.
Electronic Check Conversion (ECC)
A conversion operation will scan a paper check and extract the bank account information for processing, thereby “converting” the check to an electronic transaction. This conversion changes the check from a paper check to an ACH Debit from the check writer’s account. The check service provider may also guarantee the truncation/conversion if the merchant’s account was set up to provide this service as part of the truncation/conversion.Those that cannot be converted may still require physical bank deposits. The messages returned from the services will indicate which checks must be retained and deposited normally in the bank.
Note: Some SLIM CD service providers support CHECK21 transactions instead of normal ECC, which can convert almost any type of paper check into an electronic draft.
ACH / Direct Debit Processing
SEC Codes
Automated Clearing House (ACH) processing allows a merchant to directly debit a checking account by simply supplying the bank routing and account number.
POP – Point of Purchase. The ECC transactions described above actually ACH POP transactions. The check must be physically present and scanned at the checkout counter to conduct a POP transaction.
WEB – A transaction that is initiated over the Internet. The rules for accepting consumer-entered checking account information over the internet must be followed in order to accept a WEB transaction. These include such things as proper security and insuring a copy of the agreement to debit the account that was shown to the consumer at the time of data entry can be reproduced upon request from the consumer’s bank.
TEL – A transaction that is initiated by the consumer reading their checking account information to a merchant over the telephone. This type of transaction has requirements to record the consumer agreeing to be debited and to be able to reproduce that recording upon demand.
PPD -A transaction to debit a consumer’s personal checking/savings account. This is typically done for recurring payments, such as a membership or mortgage but can be done for one-time payments as well. PPD transactions require the consumer to sign a document giving permission to debit the account while informing them of the date the debits will initiate, the amount, and frequency as well as instructions on how to cancel the authority to debit the account.
CCD – A transaction to debit a business checking/savings account. This is typically done for recurring payments or to charge an account on file with a varying amount, such as settling a monthly line of credit. CCD transactions require a person with proper authority to sign a document giving permission to debit the account while informing them of the date the debits will initiate, the amount, and frequency as well as instructions on how to cancel the authority to debit the account.
ACH – This is a SLIM CD specific SECCODE. This code will automatically select either PPD or CCD as the actual SEC CODE, based on the “business check” indicator provided at the time of the transaction. This is useful for a system that sends multiple transactions to SLIM CD, thereby allowing a single value for SEC CODE to route to the appropriate actual SEC CODE type based on the check. Note that if the check processor only supports CCD or PPD, then all checks will be processed based on what is available.
C21 – This is a SLIM CD specific SECCODE. It will indicate the check should be routed as a CHECK21 transaction instead of an ACH via POP or other SEC CODE. This is not supported on all check processors, and may require an image of the check to be sent to SLIM CD.