General Questions About Check Conversion
Becoming Familiar With Check Conversion
Privacy And Security Questions
General Questions About Check ConversionWhat is check conversion and how does it work?Check conversion is the process of converting a payment you make by check into an electronic payment that is processed through the Automated Clearing House (ACH). When you write a paper check to a company, the company can convert your payment for ACH processing. After creating an image copy for archiving, the paper check is securely stored until it is destroyed. This is done to speed up the transaction process as well as increase the security of your payment. Is check conversion new?No. Check conversion has been in place for over five years using the same secure Automated Clearing House (ACH) system that has been used for close to 40 years for Direct Deposit and Direct Payment. Does check conversion go by other names?Check conversion may also be called Accounts Receivable Entry (ARC), Point of Purchase (POP), Back Office Conversion (BOC), electronic check, e-check, automated check, electronic check processing, and ACH. What is Accounts Receivable Entry (ARC)?Converted checks have a unique identifier code, called a standard entry class code that distinguishes them from other ACH transactions. Accounts Receivable Entry (ARC) is the standard entry class code for check conversion for checks that were written to pay bills. What is Point of Purchase (POP)?Converted checks have a unique identifier code, called a standard entry class code that distinguishes them from other ACH transactions. Point of Purchase (POP) is the standard entry class code for check conversion for checks that are written at a store checkout counter, voided, returned to a customer, and converted through the ACH network. What is Back Office Conversion (BOC)?Back Office Conversion (BOC) is the standard entry class code for checks that are written at a payment location for goods or services, and converted from paper to electronic debit later at a centralized location. Checks converted under BOC are securely stored by the merchant until destroyed. What are the benefits of check conversion?As with other electronic transactions, check conversion can result in fewer bad checks, earlier fraud detection, fewer errors, more privacy, and reduced processing costs. Who benefits from check conversion?Everyone benefits - consumers, companies and the U.S. economy. Electronic payment processing via the Automated Clearing House has advanced to the point that the processing is seamless and largely transparent, as well as beneficial to both you and the companies with whom you do business. How widespread is the use of check conversion?Check conversion is an increasingly common process of converting paper checks to electronic payments. It's use is growing rapidly and will continue to grow. Exactly how is a payment made under check conversion?Checks are converted into electronic payments via the Automated Clearing House (ACH) network, the same safe, reliable system used by hundreds of thousands of companies for Direct Deposit of payroll and by the Federal government for benefit payments such as Social Security. The ACH system is a closed, private network that is not accessible to the general public and has been in existence for close to 40 years. How did the movement toward ACH-based electronic payments and check conversion begin?Electronic payments processed through the Automated Clearing House, such as Direct Deposit, have close to a 40-year history of safety, security and privacy. Due to the costs and risk involved in processing checks, many industries have been encouraging a move from paper-based payments to ACH payments for many years. Becoming Familiar With Check ConversionDo businesses have to notify me in advance of check conversion?Yes. The notification can occur in a number of ways - if you're in a store or business, the notice must be posted in a "prominent and conspicuous" location, and notification must be on your receipt or a "takeaway" notice. If you mail in a check to pay a bill, a notice will be inserted in your bill, or you may see a note on the bill itself. If a business uses check conversion, am I required to comply?Businesses are required to offer consumers an opt-out option. When in a store, the easiest way to opt out is to use a different form of payment. What happens to my check after it is converted?Checks converted at the point of sale using POP are voided and returned to customers. Checks converted using BOC or ARC will be imaged, and securely stored until destroyed. What is a check image?A check image is simply a "picture" or "copy" of your check. Check imaging is the process of converting checks to a digital format for secure storage. Can I get my original check back? What about a copy of the check image?If you are writing a check in a store, the original check may be handed back to you. In other cases, where the store is processing checks in a centralized location, or you're sending a check to a billing company, your original check will be securely stored until it is destroyed. A check image is made for your security, and businesses must provide copies if requested. However, all of the relevant information for tracking or proving payments will be on your account statement, including name of billing company, the check number, and the date and amount of payment. How will I recognize the payment on my account statement?The "payee" on your account statement should match the "payee" on the check you wrote. The check number will be included in the transaction detail on your account statement. Where does a check conversion show up on my account statement?A check conversion may appear in the same space as ATM withdrawals, Direct Payments and other electronic payments, or it may remain in the check listing. The name of the company paid, the check number, and the amount will be on your bank or credit union statement. How will I keep track of my checks that are converted?Check conversion provides easier recordkeeping because the name of the business, the date of the payment, the check number, and amount of the payment are listed on your account statement. Converted checks may appear in the same space where ATM withdrawals and other electronic payments will appear. How can I prove that I made the payment?Your customer account statement from your bank or credit union will show the date, the check number, the name of the billing company and the amount of the payment. Your account statement is accepted as proof of payment. Does my payment clear faster with check conversion?The payment may clear faster when a company has converted the paper check to an electronic payment that will be processed through the ACH network. Consumers should be sure they have adequate funds in their checking accounts to cover the amount of their checks. Who authorized the business to convert my check?The company must notify you if it is using the check conversion process, usually with a note on the bill or with an enclosure in the bill. When you mail in the payment, you have authorized that your payment can be converted from a paper check to an electronic transaction. At a retail store or business, the company must notify you via a sign posted in a prominent location or on your receipt that your check is being converted for ACH processing. When you pay by check after being notified, you are authorizing the conversion. I recently made a payment by check at a business. The cashier ran the check through a machine and handed it back to me. Is this check conversion?Yes, this is one form of check conversion. Referred to as a POP (point-of-purchase) transaction, this allows businesses to capture payment information from your check, which is then processed electronically through the ACH network. The original paper check is voided and returned to you. I recently made a payment by check at a business, but didn't get the cancelled check back, and it is showing up on my account statement with the ATM withdrawals. Is this check conversion?Yes. The check was most likely converted by the business in the "back office" (BOC). This check conversion application is one way that businesses can process paper checks. Once the payment information from the check has been captured, the payment is processed electronically through the ACH Network. Your original check is securely stored until it is destroyed. Privacy and Security QuestionsIs check conversion governed by any regulations?The Federal Reserve's Regulation E and the NACHA Operating Rules regulate electronic payments processed through the Automated Clearing House. Because of Reg E and NACHA's Operating Rules, consumer accounts are protected from unauthorized or fraudulent transactions. Is check conversion legal?Check conversion, one of several methods of electronic payment, is legal. Is check conversion safe and secure?Yes. ACH-processed electronic payments are safe and secure - a network of computers does the work. Encryption, message authentication codes and other security procedures protect the information. Who authorized a merchant to convert my check?The company must notify you if it is using the check conversion process, usually with a note on the bill or with an enclosure in the bill. When you mail in the payment, you have authorized that your payment can be converted from a paper check to an electronic transaction. At a retail store, the company must notify you via a sign at the checkout counter or on your receipt that your check is being converted for ACH processing. What are the possibilities of fraud or other problems in the ACH network?In over 30 years there have been very few instances of fraud in this system. Any occurrence has been quickly resolved. The system is very safe - banks use it every day to transfer billions of dollars. ACH-based electronic payments are protected under Federal Regulation E, which gives consumers 60 days from the date their account statement was postmarked to dispute an ACH transaction that has posted to their account. What if I have a debit on my account statement from a company I don't recognize?This debit may be from a company where you shopped or that you made a bill payment to recently. See if the amount matches the amount of a check you wrote. If not, contact the company and/or your financial institution and ask for clarification. What if it turns out the debit is unauthorized?That is extremely unlikely. In such a rare case, you will have to sign an affidavit saying that the transaction was unauthorized. Your financial institution will then return the transaction to the company and credit your account. You should contact the company to discuss this action. Can a billing company, store or other merchant take extra money from my account using check conversion?No. Under Regulation E and the NACHA Operating Rules, only the amount of the check may be deducted from your account. The NACHA Operating Rules and Reg E provide protection if there are unauthorized debits from your account. Can the billing company, store or other merchant see how much money I have in my account?No. Your financial institution protects your financial information. While the company's financial institution debits your account, the company itself has no access. You have more financial privacy with check conversion. What if the billing company, store or other merchant debits the wrong amount?Problems with check conversion are rare. Electronic payments processed through the ACH network generally have fewer problems and faster error resolution than checks. If such a problem should occur, contact the company immediately. What if the payment is deducted twice, once as a check and again as an electronic payment?The system was designed with safeguards to avoid this problem. However, in the event of any such error, alert the company or your financial institution. When your check is converted to an electronic payment for ACH processing, you are protected under Regulation E, the same regulation that protects against unauthorized use of an ATM or debit card. What happens if I disagree with the billing company, store or other business?First, call the company to talk to a customer service representative. If that is not satisfactory, call your financial institution and explain the situation. With ACH-based electonic payments, your rights against unauthorized payments are protected by Federal Regulation E. Can I put a stop payment on a check conversion?Yes. As with a paper check, you place a stop payment before the payment is posted to your account. I placed a stop payment on a check but it went through anyway. Why did this happen and can I get my money back?A stop payment must be placed before the check is converted to an electronic payment for processing by the Automated Clearing House. You must report errors to your financial institution within 60 days after your account statement was postmarked. |
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