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NEWS RELEASE
Contact:
NACHA Approves Rules
for Back-Office Check Conversion
Customer Service Training and
Consumer Education
Program to Begin in Summer
San Diego,
California, May 8, 2006 - The voting members of
NACHA - The Electronic Payments Association have
approved an amendment to the NACHA Operating Rules
that will allow retailers and billers that accept
checks at the point-of-sale or at manned bill
payment locations to convert eligible checks to ACH
debits in the back-office. Known as back-office
conversion, or BOC, the rules become effective March
16, 2007. NACHA announced the new rules here today
at PAYMENTS 2006, its annual conference.
"Back-office
conversion will enable financial institutions to
provide additional value to their customers in a
business environment where many checks are still
used," said Steve Ellis, Chairman of NACHA and
Executive Vice President of Wells Fargo & Company's
Wholesale Banking Group. "As consumers and
businesses continue to move from cash and checks to
electronic forms of payments, financial institutions
continue to find opportunities to provide their
customers with value-added electronic services to
collect checks."
Several
requirements of the BOC rules are intended to ensure
that customers are properly notified that their
checks may be converted, that customer service
contact information is provided, and that customers
have the ability to opt-out. The notification
requirements are consistent with those recently
required by the Federal Reserve's changes to
Regulation E.
NACHA will conduct
an industry training and education program on
back-office conversion later this summer. The first
stage of this program will provide customer service
training materials to financial institutions, and
consumer-friendly information and brochures to
retailers and billers interested in using BOC. The
materials will be announced and made widely
available through the Check Conversion section of
the new Electronic Payments web site -
www.electronicpayments.org.
Consistent with
other rules recently passed by NACHA in November
2005 and that become effective in September 2006,
the BOC rules define checks that contain auxiliary
on-us fields or are written for amounts greater than
$25,000 as ineligible for conversion. These
definitions provide simple and effective methods for
retailers and billers to identify checks that are
not eligible for conversion.
Back-office
conversion will also allow financial institutions to
convert eligible checks received in image files to
ACH debits. The same rules and eligibility
definitions apply to this processing scenario -
i.e., proper notice and contact information must be
given, customers must be given the ability to
opt-out, and checks with auxiliary on-us fields or
for amounts greater than $25,000 are ineligible.
Check conversion
at the point-of-sale has been available in the
marketplace since September 2000, when NACHA's
point-of-purchase (POP) rules went into effect.
Additional check conversion rules for accounts
receivable (ARC) payments became available in March
2002. NACHA estimates that 2.3 billion checks were
converted into ACH payments in 2005.
About NACHA - The
Electronic Payments Association
NACHA is the leading
organization in developing electronic solutions to
improve the payments system. NACHA represents more
than 11,000 financial institutions through direct
memberships and a network of regional payments
associations, and 650 organizations through its
industry councils. NACHA develops operating rules
and business practices for the Automated Clearing
House (ACH) Network and for electronic payments in
the areas of Internet commerce, electronic bill and
invoice presentment and payment (EBPP, EIPP),
e-checks, financial electronic data interchange
(EDI), international payments, and electronic
benefits transfer (EBT). Visit NACHA on the Internet
at www.nacha.org.
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