Page 1 Electronic Check Representment and How the System Works
Page 2 The Representment Process
Page 3 Frequently Asked Questions

1. Enter check data into the CheckREP NSF check manager software. This can be done by keystroke, check reader, or import of an ASCII file into the software. The software manages the entire process from the transmission of the NSF check to the receipt of the results data.

2. Transmit the data to our processing center by pressing a button. The software sends the data and lets you know that it has been successfully received.

3. All files received by 4:30 PM EST will be transferred into NACHA files and transmitted to the ACH the same day.

4. Once a day for five business days all payments and returned items are received from the ACH. Return items are those items not paid because of NSF, account closed, etc.

5. On the 5th business day it is assumed that most of the items which will be returned have done so and that day we credit the agency bank account through the ACH for those cleared items. At the same time, the Client’s results files are posted in the host computer and when the Client dials in, the host computer automatically transmits the results files back to the Client’s computer.

6. Results Files give the Client a complete tracking of every check in every batch - what was paid, when paid, what was unpaid and the R code reason for nonpayment - the CheckREP software is an NSF check manager system.

7. Reversals are those items for which the agency has already been paid but which are returned after the 5^th day. Under ACH rules a Consumer has 60 days from the effective date to reverse a previously authorized ACH transaction. Once we receive a reversal we immediately debit the agency and fax a "Reversed Item Report" citing the original batch containing the reversed item, the amount, and other pertinent data.

8. Invoicing is performed and sent to the agency on the 5^th day of the month following the transmission of files and your accounts will be debited 10 days later for the previous month’s activity.

IMPORTANT FEATURES OF THE CheckREP SOFTWARE: the CheckREP software does much more than just transmit the data and retrieve the results. Constant updating has made the software the most powerful software package in the industry.

Here are just some of the important features of this extraordinary software package:

1. ABA database – includes the bank name, address, telephone # for the bank associated with every ABA # - just right click on an ABA number and get the info.
   

2. Checkwriter Search – see a familiar name?, want to find out the history of a particular check writer? – key into the search area and find all the activity of that check writer in your system. All checks and their disposition will show up.
   
3. Closed Accounts – filters out and warns you of closed accounts if a closed account check has previously been entered into the database – saves you money by not transmitting.
   
4. Transmit Limit – a check that is entered a 3^rd time will be rejected (you can only transmit 2 times electronically). In addition, the system will reject an item that is over 180 days old and/or over $2500 – in accordance with NACHA rules.
   
5. Resubmit Pool – When you receive results files you can resubmit the NSF and Uncollected funds items (up to a total of 3 times paper and electronic). Just send them to a buffer for resubmission. Once the buffer is complete – transmit!
   
6. Fees collection – when you are paid on an item it can be viewed in a paid list on screen. You can add fees to these items and submit the item for fee collection by just clicking on it.
   
7. Letter Selection – there are multiple notification letters that you can create in system and print out to send to your customer.
   
8. Enhanced Windows Functions – screen resizing, data sorting, and printing.
   
9. Imaging System – The software includes a built in imaging system. All that is need is the RDM imaging reader. The RDM imager reads the check and transfers the information into the CheckREP software and at the same time sends the check image into a database. This database can later be transferred to a writable CD Rom for storage.

ELIGIBLE ITEM REQUIREMENTS: the following requirements must be met in order to electronically represent a check item:

• A check dated 180 days or less from the day of transmission
  

• A check in an amount of less than $2500
  
• A check that has not already been transmitted twice electronically
  
• A check that indicates on its face it was returned for "NSF" or Uncollected Funds

NOTIFICATION TO CONSUMER OF ELECTRONIC REPRESENTMENT: The consumer must be informed of the intention to collect NSF checks via electronic representment. Following are acceptable forms of notification:

• A sign posted at the point of sale

• An authorization slip signed by the consumer at the point of sale

 
SIGN EXAMPLE: Following is a sample of a sign that should be used at the point of sale:

CHECK PROCESSING POLICY   In the event that your check is returned unpaid for insufficient or uncollected funds, we may present your check electronically. In the ordinary course of business, your check will not be provided to you with your bank statement but a copy can be retrieved by other means. Additionally, we may electronically  assess a $xx.xx returned check fee against your account. Thank you for your cooperation

LETTER ELEMENTS: the ChekREP software can automatically print notification letters for you. The software can print the letters for every customer in a batch or for selected customers. A sample letter is included in the batch but you can modify it to your preferences – you can have several different letters in the software and simply choose the one that is most appropriate for each customer.

AUTHORIZATION SIGNATURE FOR FEE COLLECTION: According to NACHA rules the fee amount can be collected but needs an authorization signature from the check writer in order to legally collect it.

The best way to gather the authorization signature is at the Point Of Sale using a stamp to imprint the proper wording on the check and having the check writer sign the stamped authorization.

 BILLING: You will receive an invoice for all transaction charges and monthly maintenance fees on or about the 5^th of the month following the month during which transactions took place. Your account will be billed via EFT 10 days past the invoice date of the bill.

NACHA Approves Rule for Electronic Collection of Returned Checks:

The first in a series of articles on implementing the new RCK rules

On March 4, 1998 NACHA approved a rule for the electronic collection of checks returned for insufficient funds (NSF). Beginning September 18, 1998, checks that have been returned unpaid for NSF can be collected through the ACH Network instead of the paper check clearing system.

The new rule creates a new Standard Entry Class Code - RCK (for Re-presented Check Entry) - under NACHA's Operating Rules for the ACH Network. The RCK code provides a method to initiate an ACH debit transaction in place of a paper check, after the original paper check is returned for insufficient funds. The RCK rule becomes effective September 17, 1999.

NACHA also approved an interim rule, effective September 18, 1998 through September 16, 1999, to allow ACH, participants to use the existing Preauthorized Payment and Deposit (PPD) Standard Entry Class Code to initiate these transactions,

For businesses and financial institutions, the collection of returned checks through the ACH Network will bring substantial cost and time savings. Steve Schutze, Senior Vice President of Nations Bank said., "The new Re-presented Check Entry transaction was created in response to the needs of businesses and financial institutions for faster and more successful collection of returned checks."

In preparing this rule, a NACHA Rules Work Group reviewed 126 comments from financial institutions, businesses, and other stakeholders in the ACH Network. The respondents estimate that costs associated with representing an NSF check can be reduced by up to 50 cents per check for businesses, and one dollar per check for financial institutions, by using electronic representment. Lower costs make the collection of small-value checks more practical. In addition, NACHA projects that the rate of successful collection of NSF checks could increase by 25 to 50 percent.

Use of the new ACH check collection transaction can result in quicker removal of negative information from check verification databases, meaning that Clients will be able to accept checks again sooner from many of their customers.

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.

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