The 5 things you must know about accepting
a Check by Phone, Fax or Web
by Wayne Akey

Accepting a check by phone, fax or web is a great way to increase revenues, decrease collection headaches and offer new payment options BUT there are several essential "things" that you MUST know.

First let's talk about all the great benefits:

1. You don't have to wait for a customer to mail in payment.
2. It's a LOT less expensive than a credit card. A credit card transaction always involves a discount rate. Typically around 2.3% it means that you pay that percentage of the transaction dollar amount as a processing fee.
3. You find out about NSF or rejected transactions must more quickly than a paper check-typically within 2-3 days.
4. You can call a late payer and tell them "no you don't have to send out a check we will take your check right now"
5. It's safe for the business and the customer. 6) You offer an alternative to credit card payments for those who are at or over their limit OR do not have a credit card (there are LOTS of people)

Now what you MUST know:

1. The funds transfer is not "guaranteed". With a credit card the funds for your transactions are "booked" for you when you perform a transaction. A check by phone (an ACH transaction-more info at www.ach-payments.com) is a request that funds be transferred. The money may or may not be in the customer's account. The collection of NSF funds can be automated to ease this burden as well as the availability of front end checking account verification tools.
2. The governing body of electronic transactions, NACHA (www.nacha.org), states that a check by phone transaction be accompanied by notification (or a recording of the transaction that can be accessed) of the transaction to the customer. This notification can be done by sending a postcard or email confirmation of the transaction.
3. The customer has a 60 day revocation window to dispute the electronic debit to their account. They may "charge back" the monies debited (hence the NACHA rule that you have proof of their assent to the debit).
4. You may not accept a business check by phone. This rule is under review by NACHA. The issue NACHA has is that the person on the phone for the business may or may not have the authority to authorize an electronic debit. You can obtain written permission from an authorized person at that business to debit their account via the ACH network and in that manner accept the check by phone.
5. Recurring debits to the customer's account are not allowed (NACHA again) based upon voice obtained permission. Their must be some kind of written permission from the consumer although a web based permission for recurring debits would be acceptable.

So your business absolutely should consider implementing check by phone payment functionality but keep these 5 things in mind to make your business life easier.

C2005 by Wayne Akey

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Wayne Akey has helped numerous businesses reduce costs and increase efficiency. Get your Free Ebooks on "The Secrets of ACH Processing" and "How to Save over 80% on Payment Processing" at http://www.ach-payments.com