Electronic Check Conversion Service

The target audience for Electronic Check Conversion is any retailer that accepts personal checks as payment for goods or services. A merchant seeking to significantly reduce their depository fees or consolidate multiple banking relationships as well as anyone who is looking to decrease the time used to prepare bank deposits will benefit.

Electronic Check Conversion is the process of converting a paper check into an electronic funds transfer transaction. The process involves scanning a check through a MICR reader to capture the MICR account information and consumer demographics. Once authorized, daily settlement of funds occurs by use of the ACH (Automated Clearing House) electronic funds transfer system. Upon approval of the check transaction, the customer is presented with an EFT (Electronic Funds Transfer) authorization receipt, which is then signed to allow a debit to the customer's account and a credit to the merchant's account. Once the customer has signed the authorization receipt, the check is no longer a negotiable instrument, it is stamped "VOID - THIS CHECK WILL BE CONVERTED TO AN ELECTRONIC FUNDS TRANSFER", and returned to the customer thus eliminating the need to take the paper check transaction physically to the bank for deposit.

Merchant Benefits

All Electronic Check Conversions are guaranteed - There is no check to submit on converted items, so if a converted transaction is returned unpaid, the merchant will not have to submit any information for payment. The merchant receives funds within 48 hours regardless of the availability of funds for the transaction.

Reduce Bank Fees - The process of converting checks to paperless, ACH transactions leaves the merchant wtih fewer checks to deposit each day. In addition, any returns on ACH transactions will be represented electronically. Reducing the number of paper checks and/or re-presentments of checks will reduce the deposit and transaction fees a merchant may be paying their bank.

Reduce Employee Time and Expense - Removing checks from the paper process also reduces the preparation and balancing time needed to prepare deposits. There will be fewer paper checks to deposit each day, therefore, this will save time and expense for employees.

Improve Cash Flow - Banks typically post non-paper transactions prior to paper checks; therefore, electronically converted checks will usually clear before paper deposited checks.

Simplified Bank Reconciliation - Converted checks can be consolidated into one bank account from multiple store locations.

Enhanced Collections - The availablity of funds is improved by the ability to electronically represent unpaid items. In addition, returned check fees can be debited directly from the consumer's account.

Reduced Fraud - Returns on electronically converted items are received much faster than returns for paper checks. Therefore, negative files are updated much faster.

Increased Sales and Profits - Funds from converted transactions are posted to the merchant's account usually within 48 hours of the transaction. Any transaction that is authorized and approved before 9pm EST will be settled to the merchant's account the next banking day.

Merchant Limitations

Conversion Exceptions - Not all checks can be converted electronically, thus the merchant will still be required to manually deposit paper checks that could not be converted. Conversion exceptions will be a small percentage of checks depending on industry. Current exceptions are:
Government checks, Cashier's checks, Money Orders, Site Drafts, 3rd Party checks, Traveler's checks, Payroll checks, Counter checks, Corporate/Business checks, Credit Card Convenience checks

Administrative Returns - These will occur on MICR misreads, some special accounts, and transactions on non-participating banks and credit unions and result in the inability to clear the transaction. Some may result in collection accounts or be manually corrected and resubmitted.

Transaction Dollar Limit - NACHA does not impose a dollar limit on the amount of the check, but our risk management services do set dollar limits.

Retention of Authorization Slips - NACHA regulations require the merchant to retain the original, signed authorization slip for a minimum of 2 years.

Consumer Declination of Conversion - A consumer may decline authorization of the check conversion process.

The system pictured above features the Verifone Omni 3750 + CR1000i check imager to scan the entire check for the Electronic Check Conversion processing. Using an imager solution, documenting additonal drivers license information on the check is avoided. This solution is perfect when processing both credit cards and checks and comes with a stand to secure both in a minimal amount of counter space.

Service Pricing:

For Electronic Check Conversion, there is a discount rate percent charge for each check you converted (rates are based upon industry and location). Please contact us for a rate quote. 3 month contract with monthly renewals.

Electronic Check Conversion

Cash management is greatly improved by eliminating the need to sweep funds from local banks to a central account.

Checks are electronically deposited so merchants no longer have to fill out deposit slips or travel to the bank to make deposits, which greatly reduces the costs associated with check handling.

Users are informed of NSF and other return items much faster than paper-based systems, whcih allow the collection process to be expedited.

Truncation eliminates the possibility of lost or stolen checks before the merchant can deposit them.

Check fraud can be detected much quicker, which will stop bad check writers days before conventional paper-based methods.

Check Warranty is included with Electronic Check at the point of purchase, which greatly reduces losses and fraud associated with accepting checks.

Fewer individuals handle the items. Up to ten different people normally handle a paper chech before it gets to the consumer's financial institution. With Electronic Check, only the check writer and the cashier will view the source document.

With Electronic Check, consumer payment behavior patterns are not affectted; the only change occurs in how the items are processed.
Customer response to conversion has been neutral or positive.

The total cost to process paper items through the system is reported to be approximately $3.50. Electronic Check Conversion is less expensive.