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What is Check Re-Presentment? |
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Check Re-Presentment is a Revolutionary New NSF Check
Collection Process
Electronic Check Re-presentment is the
conversion of non-sufficient funds (NSF) and uncollected funds checks into electronic
items.
WHAT ARE THE
BENEFITS OF ELECTRONIC CHECK RE-PRESENTMENT?
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Lower Collection Costs.
Most banks charge $2 to $4 to redeposit a NSF check, whereas with CPI's FastCollect
program there is no charge for representing the item. Most banks charge $4 to $5 or more
per re-deposited NSF check that returns a second time; whereas, with CPI there is no charge
for NSF checks that return a second or third time.
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Dramatic Improvement in Collection Rate.
The National Automated Clearing House Association (NACHA) reports increases in
collection rates by as much as 50% to 85% as compared to traditional collection
methods. The faster the NSF check is represented electronically, the higher the
recovery rate.
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Faster Deposit to the Merchant's Bank
Account. As an industry standard, it takes approximately 5 days from
the time the file is received by the Automated Clearing House (ACH) Network to procure
payment. This 5-day period allows time for the check to be completely processed and
payment information received. Transactions that are recovered electronically are then
deposited directly into the merchant's account for reconciliation. Traditional collection
methods take 30 to 60 days to recover NSF items compared to 5 days using CPI's electronic
recovery program.
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Timing the NSF Check Representment.
CPI can time the 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.
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Verification of Available Funds. CPI monitors the check writer's bank account for 30 days if the first representment is
unsuccessful. Then as soon as funds are available an electronic debit is sent
through the ACH.
IS ELECTRONIC
CHECK RE-PRESENTMENT LEGAL?
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, which allows financial
institutions to exchange payments on behalf of business customers and consumers.
Steve Shutze, Senior
Vice President of NationsBank said, "The new Represented Check Entry transaction
(RCK) was created in response to the needs of businesses that require faster and more
successful collection of returned checks."
The RCK rule requires
businesses that plan to collect returned checks electronically to notify check writers at
the point of sale or on monthly bills, in a manner similar to notices currently required
for collection fees.
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
associations, six councils and corporate Affiliate Membership program. A leader in
the payments industry, NACHA develops operating rules for the ACH Network and for emerging
electronic payment solutions in the area of Internet commerce, bill payment and
presentment, financial EDI, cross border transactions, electronic checks and electronic
benefits transfer. NACHA produces marketing and technical publication and provides
extensive education services, including major conferences and seminars.
CAN A BAD CHECK
FEE BE CHARGED TO THE NSF CHECK WRITER?
Yes. This fee can be debited
electronically, however, certain guidelines must be adhered to, and it must be a separate
transaction from the original NSF recovery transaction. In order to collect the fee, the
consumer must sign an authorization, e.g. the authorization may be stamped on the
customer's check at the point of sale.
HOW SOON DOES THE MERCHANT GET
PAID ONCE THE CHECK IS RECOVERED?
The merchant receives the funds within 7 business days
after the transaction is submitted to the ACH. This period allows time 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.
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