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NEWS RELEASE
Welcome BOC:
New Check Conversion Method Will Fill Market Need
NACHA Publishes Implementation
Guide, Makes Resources Available Online
Herndon,
Virginia, March 12, 2007 - Back Office
Conversion (BOC), the newest form of check
conversion, becomes available in the marketplace on
Friday, March 16, 2007 with the effective date of
NACHA’s rules. BOC 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.
“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.”
Other forms of
check conversion have been used by retailers and
billing companies since as early as 1999. NACHA
estimates that as many as 3.2 billion checks were
converted into ACH payments in 2006, an increase of
36 percent over 2005. The existing form of check
conversion in use at many retail locations grew by
an estimated 60 percent in 2006.
“Back Office
Conversion fills an important market need for
efficient payment processing,” said Elliott C.
McEntee, President and CEO of NACHA – The Electronic
Payments Association. McEntee also noted, “The
existing method of converting checks at the
point-of-purchase will still be available, and for
many retailers this will continue to meet their
needs.”
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 required by
the Federal Reserve Board under its Regulation E.
Consistent with
NACHA rules for other forms of check conversion,
checks that contain auxiliary on-us fields or are
written for amounts greater than $25,000 are
ineligible for Back Office Conversion. These
definitions provide simple and effective methods for
retailers, billers and their financial institutions
to identify checks that are not eligible for
conversion.
Back Office
Conversion also allows financial institutions to
convert eligible checks received in image files to
ACH debits. The same authorization and eligibility
rules 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.
“For many
businesses, Back Office Conversion will enable them
to have a single process to electronically deposit
all of their check payments with their banks,” said
McEntee. “At that point, banks can determine which
ones are eligible for conversion, and the most
appropriate way to clear each check.”
To help businesses
and financial institutions understand BOC, NACHA has
authored a new publication, Guide to Implementing
a Back Office Conversion Entry Program. The
Guide provides ACH Network participants with
specific economic, operational, legal, and risk
management considerations that might arise when
implementing BOC. The Guide is available at NACHA’s
Online Publications Catalog at
http://pubs.nacha.org/echeck.html.
With businesses
and the financial services industry gearing up for
Back Office Conversion, NACHA’s BOC Education Task
Force has created a suite of tools, resources, and
training materials for financial institutions and
businesses to use and reference during the
implementation phase of BOC.
“NACHA and its
members are committed to educating the marketplace
and consumers about check conversion,” said Mark
Tizzard, Payment Strategies Director of Wachovia,
and co-chair of the BOC Education Task Force, the
group that spearheaded this effort. “The training
materials provide businesses, processors, and
financial institutions with a tremendous amount of
organized and interactive information to answer
their customers’ questions about Back Office
Conversion.”
“Several
requirements of NACHA’s Back Office Conversion rules
are intended to ensure that customers are properly
notified that their checks may be converted,” said
Peter Hohenstein, Senior Vice President of Bank of
America, and the other co-chair of the BOC Education
Task Force. “Even so, consumers may still have
questions that either businesses or their financial
institutions will need to answer.”
The materials can
be accessed and downloaded from the Business or
Financial Institution sections of the Electronic
Payments web site at
http://www.electronicpayments.org.
About the ACH
Network and NACHA - The Electronic Payments
Association
The Automated Clearing House (ACH) Network
facilitates commerce, electronically, by serving as
an efficient, reliable and secure payments system.
NACHA, led by member depository financial
institutions and payments associations, fulfills
this purpose by managing the development,
administration, and governance of the ACH Network,
and by providing superior services and value to its
members as the industry association responsible for
ACH payments. 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.
Visit NACHA on the Internet at
www.nacha.org.
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