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Check Recovery FAQ. .

FAQ's

1. What is electronic check representment?

2. RCK, What is it?

3. What are the benefits of electronic check representment?

4. Is electronic check representment legal?

5. What is the National Automated Clearing House Association (NACHA)?

6. What is the Automated Clearing House (ACH) Network?

7. How many times can an NSF check be submitted for processing?

8. How does this work?

9. Can a bad check fee be charged to the NSF check writer?

10. How soon does the merchant get paid once the check is recovered?

11. What has been the consumer's reaction to electronic check representment?

12. What's the difference between processing these checks electronically VS. the old way?

13. How are the NSF checks sent to the local processor?
    

1.  What is electronic check representment? 

Electronic Check Representment is the conversion on non-sufficient funds (NSF) and uncollected funds checks into electronic items.  These items are then sent through the ACH Network for collection.

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2.  RCK, What is it? 

Re-presented check entry (RCK) is an automated collections process that accelerates the collection of consumer checks that have been returned by the check writer' bank for insufficient funds.  Merchants, both large and small, who have experienced losses due to the inability to collect on dishonored checks will benefit from the expedited collection process, improved efficiency, and reduced costs associated with the re-presented check entry process.

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3.  What are the benefits of electronic check representment? 

• Electronic Items Have Priority Over Paper Checks- Banks work very efficiently to ensure that all payment instruments are processed in the most timely fashion to meet daily deadlines. Given the automated process of the Automated Clearing House, banks are able to process these items without the manual process of centralizing; sorting and proofing paper checks. In order to optimize daily settlement activity, ACH items (electronic items) have processing priority over paper checks, which improves the likelihood of funds availability in the consumer's bank account. Banks work very efficiently to ensure that all payment instruments are processed in the most timely fashion to meet daily deadlines. Given the automated process of the Automated Clearing House, banks are able to process these items without the manual process of centralizing; sorting and proofing paper checks. In order to optimize daily settlement activity, ACH items (electronic items) have processing priority over paper checks, which improves the likelihood of funds availability in the consumer's bank account.

• Improves Collection Results- With the electronic process of check collection, items are submitted much more quickly (up to 4 days sooner than paper) thus permitting timely access to consumers' accounts for re-presentment. Collection studies show that for every day gained in re-presenting an item for collection, the percentage of collecting that item is increased by at least 5%.

• Reduces Internal Collection Costs- Due to the electronic streamlining of collection activity afforded through the ACH, significant internal costs can be immediately recognized by eliminating the manual process of handling and re-depositing paper checks. Due to the electronic streamlining of collection activity afforded through the ACH, significant internal costs can be immediately recognized by eliminating the manual process of handling and re-depositing paper checks.

• Lowers Bank Fees- Due to the expense associated with paper handling, fees associated with encoding charges and insufficient funds returns are greatly reduced. Due to the expense associated with paper handling, fees associated with encoding charges and insufficient funds returns are greatly reduced.

• Submission for Collection on Small Value Checks- Due to the fact that the cost of creating an ACH debit is much lower than the cost of re-depositing the paper check, small value checks can now be collected cost effectively. Due to the fact that the cost of creating an ACH debit is much lower than the cost of re-depositing the paper check, small value checks can now be collected cost effectively.

• Lower Collection Costs- Most banks charge $2 -$4 to redeposit a NSF check, whereas, with Electronic Check Representment there is no charge for representing the item. Most banks charge $5 -$10 per redeposit NSF check that returns a second time" whereas, with Electronic Check Representment there is no charge for NSF checks that return a second time. Most banks charge $2 -$4 to redeposit a NSF check, whereas, with Electronic Check Representment there is no charge for representing the item. Most banks charge $5 -$10 per redeposit NSF check that returns a second time" whereas, with Electronic Check Representment there is no charge for NSF checks that return a second time.

• Dramatic Improvement in Collection Rates- The National Automated Clearinghouse Association (NACHA) reports increases in collection rates by as much as 50% as compared to traditional collection methods. Recovery can be as high as 80%. The faster the NSF check is represented electronically, the higher the recovery rate.

• Faster Deposit to Your Bank Account- As an industry standard, it takes approximately 5 days from the time the file is received by the Automated Clearing House (ACH) to procure payment. This 10-day period allows for the check to be completely processed and payment information received. Transactions that are recovered are then deposited directly into the merchant's account for reconciliation. Traditional collection methods take 30-60 days to recover your NSF items compared to 5 days using Electronic Check Representment. As an industry standard, it takes approximately 5 days from the time the file is received by the Automated Clearing House (ACH) to procure payment. This 10-day period allows for the check to be completely processed and payment information received. Transactions that are recovered are then deposited directly into the merchant's account for reconciliation. Traditional collection methods take 30-60 days to recover your NSF items compared to 5 days using Electronic Check Representment.

• Timing the NSF Check Representment- We can time your Representment to hit the bank on payday; this provides a greater chance of collection. Traditional methods do not provide the ability to time the collection. We can time your Representment to hit the bank on payday; this provides a greater chance of collection. Traditional methods do not provide the ability to time the collection.

• Verification of Available Funds- We contact the bad check writer's bank to verify the availability of funds to increase our ability to recover the funds.

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4.  Is electronic check representment legal?

The National Automated Clearing House (NACHA) announced on March 10, 1998 that its Board of Directors had approved a "rule" for the electronic collection of checks returned for insufficient funds (NSF).  Checks that have been returned unpaid for NSF can now be collected through the ACH Network, the network allows financial institutions to exchange payments on behalf of business customers and consumers.  NACHA announced the new rule at its PAYMENTS 98 conference in Seattle.

Keith Theisen, Vice President of Norwest Bank, led the NACHA Rules Work Group that developed the rule.  He said, "The collection of returned checks through  the ACH Network can bring substantial cost and time savings to businesses, consumers and financial institutions.  NACHA projects that the rate of successful collection could increase by up to 50%.

Steve Shutze, Senior Vice President of NationsBank said, "The new Represented Check Entry transaction was created in response to the needs of businesses that need faster and more successful collection of returned checks."

The RCK rule requires business who plan to collect returned checks electronically to notify checkwriters, at the point of sale or on monthly bills, in a manner similar to notices currently required for collection fees.

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5.  What is the National Automated Clearing House Association (NACHA)?

NACHA, located in Herndon Virginia, represents more than 13,000 financial institutions through its 35 regional ACH association, six councils and corporate Affiliate Membership program.  A leader in the payments industry, NACHA develops operating rules for the Automated Clearing House (ACH) Network and for emerging electronic payment solutions in the areas of Internet commerce, bill payment and presentment, financial EDI, cross border transactions, electronic checks, and electronic benefits transfer.  NACHA produces marketing collateral and technical publications and provides extensive education services, including major conferences and seminars.

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6.  What is the Automated Clearing House (ACH) Network?

The Automated Clearing House (ACH) Network is the national electronic funds transfer network connecting the nations' 20,000 financial institutions. The ACH Network has been in operation for nearly 25 years and processes over 4 billion payments (Direct Deposit, Direct Payment, etc.) annually.

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7.  How many times can an NSF check be submitted for processing? 

NSF items can be represented 2 times electronically.

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8.  How does this work?

With paper handling, when a merchant receives a returned check from the check writer's bank of insufficient funds, the merchant can only re-submit the check bank to the bank once, for a total of two paper submissions.  With the Re-presented Check Entry process, the check can be sent to the bank a total of 3 times for collection.  If the merchant has sent the paper check to the bank only once, the merchant can then send the paper check to their check collection processor who will electronically re-present the check to the bank 2 more times.  With an extra presentment, chances of collection funds are improved significantly.

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9.  Can a bad check fee be charged to the NSF check writer?

Yes.  This can be processed electronically, however, certain guidelines must be adhered to, and it must be a separate transaction from the original NSF recovery transaction.

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10.  How soon does the merchant get paid once the check is recovered?

As an industry standard, it takes approximately 10 days from the time the files received by the Automated Clearing House (ACH) to procure payment.   This 10-day period allows time for the check to be completely processed and payment information received.  Transactions that are recovered are then deposit directly into a merchant's account for reconciliation.

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11.  What has been the consumer's reaction to electronic check representment?

Very favorable.  It's less embarrassing.  It restores the customer's check writing privileges quickly with no need for them to bring cash or money orders to the merchant.  A real convenience.

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12.  What's the difference between processing these checks electronically VS. the old way?

In short, speed and cost.  Depending on the amount of returned items you have to deal with annually, the bottom line impact could be tremendous.

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13.  How are the NSF checks sent to the local processor?

The merchant signs a Release Form that is sent to their bank that instructs the bank to mail all Returned Checks to the Processor prior to redepositing the NSF checks.

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