General Questions About Check Conversion
Questions Your Customers Might Have
Privacy And Security Questions
General Questions About Check ConversionWhat is check conversion and how does it work?Check conversion is the process of converting your customer check payments into electronic payments that are processed through the Automated Clearing House (ACH) Network. Check conversion can save businesses considerable time and money in payment processing. In addition, check conversion results in fewer check returns, earlier fraud detection, and fewer errors. Is check conversion new?No. Check conversion has been in place for more than five years, using the same secure Automated Clearing House (ACH) Network that has been used for close to 40 years for Direct Deposit and Direct Payment. What is Accounts Receivable Entry (ARC)?Converted checks have a unique identifier code, called a standard entry class code that distinguishes them from other ACH transactions. Accounts Receivable Entry (ARC) is the standard entry class code for bill payments by check that are converted. What is Point of Purchase (POP)?Point of Purchase (POP) is the Standard Entry Class code for checks written at a business payment counter, voided, returned to a customer, and processed as a converted check. What is Back Office Conversion (BOC)?Back Office Conversion (BOC) is the standard entry class code for checks that are written at a payment location for goods or services, and converted from paper to electronic debit later at a centralized location. Checks converted under BOC are securely stored by the business until destroyed. What are the benefits of check conversion?Check conversion can result in fewer returns, earlier fraud detection, fewer processing errors, and reduced processing costs. Who benefits from check conversion?The check conversion process adds significant efficiencies to the U.S. economy. Electronic payment processing has advanced to the point that the processing is seamless and, for the most part, transparent to your customers who benefit from the reduced time between writing and processing of their checks How widespread is the use of check conversion?Check conversion is an increasingly common procedure for converting paper checks to electronic payments for processing through the Automated Clearing House Network. Does check conversion go by other names?Check conversion may also be called Accounts Receivable Entry (ARC), Point of Purchase (POP), Back Office Conversion (BOC), electronic check, e-check, electronic check processing, and check to ACH conversion. What is the best way to notify customers that we will begin using check conversion to process payments?To promote acceptance and to minimize confusion and complaints, let your customers know you will be converting checks. Businesses are required to post a notification in a "prominent and conspicuous" location. Businesses are also required to give the customer a copy of the notification, which could be a receipt or a "take-away". In addition, the business must provide customers with a working telephone number that they can call for more information or dispute resolution. How much notice do I have to give my customers that we are now converting checks?You are required to provide notice to your customers prior to the receipt of each check to be converted to an ACH electronic payment. Because check conversion transactions are considered to single entry debits, the consumer must be notified prior to each check payment. How did the movement toward electronic payments and check conversion begin?Due to the costs and risks of processing paper checks and the fact that electronic payments offer many additional benefits, including better consumer protection, safety, and fraud reduction, financial and business organizations have been encouraging a move from paper-based payments to secure electronic payments for many years. How should I handle inquiries or complaints?To instill confidence in your business and in check conversion, make sure that your customer service representatives are trained to handle inquiries. The resources on this Web site should provide the information necessary to educate both your staff and your customers. Visit our training resources page to learn more. How should I handle topics such as opt-out and keeping images of consumer checks?Businesses are required to offer their customers an opt-out and should build an opt-out policy into their business/operating policies. If asked, you should let the customer know your opt-out policy. Many businesses will simply ask the customer for another form of payment. The business is required to securely store the check until destruction. Questions Your Customers Might HaveWho authorized a business to convert my check?The business notifies the customer that it is converting paper checks to ACH debits. When customers mail in the payment, they are authorizing the conversion from a paper check to an electronic transaction that will be processed via the ACH network. Businesses using POP or BOC must notify customers that they may be converting checks. If your customer chooses to make a payment by check, they are authorizing the business to convert the check. Do the businesses have to notify me in advance that they are now converting checks?Yes. The notification can occur in a number of ways. For bill payments, a notification will appear as a notice inserted with a bill or a note on the bill itself. In a business, the notice will be posted in a "prominent and conspicuous" location and you will receive notification on the receipt or other "takeaway". If a business uses check conversion, am I required to comply?Businesses are required to offer an opt-out option, and at a business, customers can always choose to use another form of payment. What happens to my check after I send it to the billing company, or give it to store or business?The payment information is captured from the check and the check is securely stored until destruction. Checks converted at the point of sale using POP are voided and returned to customers. Checks converted using BOC will be imaged and securely stored until destroyed. Can a billing company, store, or other merchant take extra money from my account using check conversion?No. A customer's financial institution protects all customer financial information. While the business's financial institution debits customer accounts, the business has no access. For this reason, check conversion can increase a customer's financial privacy. What if the business debits the wrong amount?Problems with check conversion are rare. Electronic payments processed through the ACH Network generally have fewer problems and faster error resolution than checks. But, should problems occur, they can usually be resolved quickly. What if the payment is deducted twice, once as a check and again as an electronic payment?The system was designed with safeguards to avoid this problem. However, in the event of any such error, alert the business or your financial institution. When a customer's check is converted to an ACH electronic payment, that customer is protected against unauthorized payments under Regulation E, the same regulation that protects against unauthorized use of an ATM or debit card. Where does a converted check show up on my account statement?A check that has been converted for electronic processing via the ACH network may appear in the same space as ATM withdrawals, Direct Payments and other electronic payments, or it may remain in the check listing. The name of the company paid, the check number, the amount, and date the payment was made will be on a customer's account statement. How will I recognize the payment on my account statement?The "payee" on a customer's account statement should match the "payee" on the check. The check number will be included in the transaction detail on a customer's account statement. What if it turns out the debit is unauthorized?In this case, a customer will need to contact their financial institution. The financial institution may return the transaction as unauthorized and initiate research. The customer will need to sign a standard Written Statement Under Penalty of Perjury saying that the transaction was unauthorized. Can I get a copy of my check?Customers may obtain a copy of the check image for checks written to pay bills (ARC), or checks written in person (BOC). Customers whose checks are converted at checkouts using POP received their voided check at the checkout. In all cases, all of the payment information will be on the customer's account statement. What happens if I have a dispute with the billing company, store, or other merchant?Customers should be able to resolve any issues with the business or their financial institution. With electronic payments, a customer's account is protected from unauthorized payments by Federal Regulation E. Can I put a stop payment on a check conversion?Yes. As with a paper check, customers can place a stop payment before the payment is posted. I placed a stop payment on a check, but it went through anyway. Why did this happen?A stop payment must be placed before the check is converted to an electronic payment for ACH processing. Customers must report errors to their financial institutions within 60 days after account statements are postmarked. Does my payment clear faster with check conversion?The payment may clear faster when a business has converted the paper check to an ACH electronic payment. Consumers should be sure they have adequate funds in their accounts to cover the amount of their payments. How can I prove that I made the payment?A customer's account statement will show the date, the check number, the name of the business and the amount of the payment. The account statement is accepted as proof of payment Privacy And Security QuestionsIs check conversion governed by any regulations?The Federal Reserve's Regulation E and the NACHA Operating Rules regulate electronic payments processed over the ACH network. Because of Reg E and the NACHA Operating Rules, consumer accounts are protected from unauthorized or fraudulent transactions. Is check conversion legal?Yes. Check conversion is legal. Is check conversion safe and secure?Yes. Electronic payments are safe and secure - a network of computers does the work. What are the possibilities of fraud or other problems in the ACH network?In close to 40 years, there have been very few instances of fraud in this system. Any occurrence has been quickly resolved. The system is very safe - banks use it every day to transfer billions of dollars. ACH-based electronic payments are protected under Federal Regulation E, which gives consumers 60 days from the date their account statement was postmarked to dispute an ACH transaction that has posted to their account. Exactly how is a payment made under check conversion?Checks are converted into electronic payments via the Automated Clearing House (ACH) Network, the same safe, reliable system used by hundreds of thousands of companies for Direct Deposit of payroll and by the federal government for benefit payments such as Social Security. It is an extremely safe network that has been in existence for close to 40 years. |
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