ACH Check Conversion

Businesses of all sizes are converting paper checks to ACH debits to decrease costs and increase operational efficiencies.

How It Works

When a customer writes a check that may be converted into an electronic payment processed through the ACH network, information such as the routing number of the bank, the customer's account number and the check serial number is captured. The transaction is then processed through the ACH Network and a one-time debit is made to the customer's account. The customer's payment experience has not changed, merely the way the payment is processed; however, customers must receive notification that their check may be converted prior to making the payment. Each check conversion process has specific authorization/notification requirements.

Types Of Check Conversion

Currently, there are only three types of ACH check conversion applications:

  • POP - converting checks at the point of sale (POS)
  • ARC - converting a paper check received in the mail or placed in a bill payment dropbox to pay a bill
  • BOC - checks that are accepted at the point of sale may be converted later in the back office and processed using the Standard Entry Class code.

Consumer and business checks within the regulatory guidelines may be converted.

Benefits Of ACH Check Conversion:

  • Reduces administrative burden of processing payments
  • Reduces cost to process transactions
  • Improved revenue flow, since electronic payments are typically processed faster than checks
  • Greater consumer protection, since converted checks are governed by Reg E and NACHA Operating Rules rather than check law
  • Improved visibility into cash position

Exclusions:

  • Check containing an Auxiliary On-Us field in the MICR line
  • Checks more than $25,000
  • Checks provided by a customer that has taken advantage of the required opt-out option
  • Checks must be drawn on a consumer or business account (other restrictions apply)

For compliance and requirement information relating to ACH Check Conversion, please refer to the NACHA Operating Rules and Guidelines.