According to ePayments, electronic processing of checks will be at its highest rate ever this holiday shopping season, but many consumers are not aware their checks are being electronically processed, and the businesses that process them could face fines for not telling them.
Consumers aren’t informed, and some businesses aren’t telling them, said Paul Lufkin, CEO of electronic payments processing and financial services firm ePayments, which assists merchants in properly processing checks presented for payment and collecting those that bounce.
It’s not a big deal until the consumer discovers bounced check fees from their bank for a check that was returned NSF in just 24 hours; and the business pays the penalty for not telling them he continued.
Under rules developed and issued by electronic payments association NACHA, merchants may use a special scanner to convert paper checks presented at the point of purchase into fast-clearing electronic transactions – as long as they get the customer’s signed authorization. Merchants must also clearly post signage and fees if electronic processing will be used to collect any resulting bad checks.
The merchant completes the transaction by stamping the check void and returning it to the consumer.
Checks are then processed through the electronic funds transfer system ACH. Such ACH payments are increasingly popular because they can save banks, businesses and consumers time and money. However, consumers don’t get the usual ‘float time’ on their checks, which can result in bounced checks and charges.
Mr Lufkin urged that it is important for both consumers and businesses to familiarize themselves with the basic rules of electronic check payment authorization.