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NSF Check Electronic Recovery Application
What merchants are looking for are increased collection rates; better, faster information on returns; and a cost effective alternative for collecting
low-dollar checks that will help reduce overall NSF check write-offs.
Internet based application for NSF check entry, and a comprehensive cradle to grave NSF check processing and management tool allowing businesses to restrictively
access current NSF check information on-line, enter NSF check information, analyze check data, and manage the entire recovery progress. Affirmative helps
ensure NSF check recovery success by providing the following:
- The latest most efficient technologically superior NSF check recovery software available in the marketplace; serving businesses
of all sizes nationwide.
- Comprehensive NSF recovery application that maximizes recovery success, quickly restoring customers, creating higher
net revenues and increased profits.
- Check imaging, storage, archiving, and on-line retrieval are available as processing functions operating in concert with
the NSF Check Processing application through multiple cost effective check imaging scanners.
- Verified Funds availability ensure increased collection success via a check debit and verification service for real-time
funds availability on a DDA account.
- Multiple check data entry points with multiple entry modes and entry formats; Manual Entry, Check MICR Reader, Check Imager,
or uploading data file directly into the NSF Check Processing Application.
- Multiple Check Classifications enable the Operator to view the current status of NSF checks as they are processed through
the NSF Application, and if desired, alter the classification to one of approximately 50 processing events that move the NSF check through the process,
event by event, from beginning to end.
- Timing is Everything; Re-presentment timing is critical to collection efforts. The NSF check recovery application enables
re-presentments to be timed to hit an account after payday--on the 1st or 15th of the month or on a Friday, collection ratios increase as check writer's
accounts typically have higher account balances.
- Validates NACHA (RCK) rules against returned check information before submission, qualifying checks as eligible for processing,
verifying that the ABA number is accurate.
- Fully integrated check drafting function allowing the operator to print consumer checks in payment of the check writer service
fee.
- Superior data security, hosting and maintenance, including a dedicated Virtual Private Network (VPN) security application
providing the very latest in secure transaction processing.
Affirmative's NSF Check Processing Application is the product of years of development, with Collection Agencies and NSF Check Recovery entities beta testing
the product prior to a successful launch in early 2003. Now in its' second generation, our NSF Check Application has no industry peer in terms of functionality
or operational scope, and its' ability to efficiently operate the NSF check recovery process from beginning to end.
NSF Check Recovery Made Easy
The benefits of electronically resubmitting NSF checks are numerous, here are just a few:
- Collection Ratios Up To 85%: NSF Check recovery collection ratios have exceeded 85%, based on age of check when processed
electronically, in some cases, more than double those submitted manually. Electronic checks are processed ahead of paper checks--jumping to the front
of the check queue, clearing ahead of checks written days earlier.
- Recovery Odds Increase 33%: Paper checks may only be submitted twice (the original deposit and one redeposit). Electronic
representment allows a third submission, significantly enhancing chances of collection.
- More Presentments: Paper checks may be presented a total of two times (the initial deposit and one re-presentment). Electronic
re-presentment allows a third submission. The third time is the charm, because tests show that on average, the third re-presentment collects an additional
25% to 50% of the remaining outstanding NSF Checks.
- First Claim To Available Funds: Electronic transactions usually get first claim to any cash in an account. Banks routinely
post electronic items to consumer's accounts before they post paper checks.
- Lower Processing Costs: Electronically processing NSF checks through our software is so efficient; an entry level Collector
can process thousands of checks each week.
- Eliminate Bank NSF Return Fees: Banks charge businesses NSF return fees of $5 to $20 per returned paper check. There are
currently no return fees for ACH electronic transactions on NSF returns, only minimal electronic transaction processing fees.
- Faster Notification: Presenting a paper check manually, and settling the transaction, may take 7-10 days or more. When re-presenting
NSF checks electronically, the time is reduced to just 24-48 hours, resulting in better collection rates.
- No Accounting Nightmare: Automatic posting of merchant settlements matches paid checks and lists those that didn't clear
for immediate follow up.
Internet based application for NSF check entry, on-line merchant and agent reporting, specifically designed for NSF Check Recovery entities, allowing
them to restrictively access current NSF check information on-line, enter NSF check information, analyze check data, and manage the entire recovery progress.
NSF checks are entered manually or a data file is imported into Affirmative’s application. Affirmative Technologies’ applications also support
MICR line only Check Data Readers and Check Imagers that gather MICR line information, creating the data file for subsequent processing. The file is processed
through the settlement bank and ACH Network, automatically debiting consumer’s accounts and crediting the Merchant’s account for the face
value of the NSF check and the checkwriter fee (or portion thereof) to the recovery entity.
What merchants are looking for are increased collection rates; better, faster information on returns; and a cost effective alternative for collecting
low-dollar checks that will help reduce overall NSF check write-offs.
NSF☼CHECKPROCESSING™ provides for:
- Secured access to an Internet entry and processing site
- Multiple entry option modes and entry formats
- Manual
- Check Reader
- Check Imager
- Uploading data file
- Multiple staff data entry points
- Validates NSF Check RCK rules against returned check information before submission, qualifying checks as eligible for processing.
- Automatically moves transaction through the recovery process based on date, event, and specific ACH re-presentment strategy, i.e. timing
submissions.
- Tracking returned checks by multiple merchants
- Automatically read "returns" and Notice Of Change (NOCs) into data tables and sets the transaction status to trigger the next event.
- Automatically tracks recovered revenue, sets up and releases merchant settlements.
- Sets up sales commissions and merchant revenue sharing for electronic payment.
- Creates numerous reports for administration and distribution of merchant account status information.
- Export report data in "text format" for entry into other accounting packages or statistical analysis software.
- Displays the next action once recovery re-presentments are exhausted.
- Disaster Recovery - Application and data are backed up nightly.
Item Processing Conditions
To be eligible to be transmitted as a re-presented check (RCK) entry, an item must:
- Be in an amount less than $2,500.
- Indicate on the face of the item that it was returned for insufficient or uncollected funds.
- Must have a pre-printed check serial number on the face of the physical check.
- Be dated less than 180 days from the date the entry is transmitted to the RDFI.
- Be drawn on a consumer account.
- Must have been previously presented (a) no more than twice in paper form, if the entry is an initial re-presented check entry; or (b) no
more than once in paper form and no more than once as a re-presentment check entry, if the entry is a reinitiated re-presentment check entry.
- Be an item within the meaning of Revised Article 4 of the Uniform Commercial Code (1990 Official Text).
- Be a negotiable demand draft drawn on or payable through or at a participating DFI, (Depository Financial Institution), other than a Federal
Reserve Bank or Federal Home Loan Bank.
Items that are ineligible for transmission as re-presented check entries include, but are not limited to:
- Non-cash items.
- Drafts drawn on the Treasury of the United States, a Federal Reserve Bank, or a Federal Home Loan Bank.
- Drafts drawn on a state or local government that are not payable through, or at, a Participating Depository Financial Institution.
- United States Postal Service money orders.
- Items paid in a medium other than United States currency.
- Items which are third-party items (e.g., the payee endorses a check over to a third party who also endorses the check).
- Demand drafts and third-party drafts that do not contain the signature of the Receiver (e.g., the drawer does not sign a check but authorizes
another party to debit his account via a draft).
ACH Transaction Clearing Account
An integral part of beginning to utilize electronic payment processing in your business is partnering up with the right ODFI-ACH Network Processor. There
are two choices; signing up with a third party processor, or directly with the source that processes your transactions through the Federal Reserve System—the
Originating Depository Financial Institution (ODFI).
Not all ODFI’s are created equal—many still use antiquated software that is cumbersome requiring lots of manual intervention, too technical
in nature, and offer poor reporting abilities. That’s where we come in.
We are associated with multiple ODFIs; all uniquely qualified to process your ACH transactions. Affirmative’s technical expertise in this area has
led to significant improvements to the process and each of our ODFIs have ACH Departments with dedicated personnel that deliver exceptional customer service.
There are distinct advantages in dealing directly with an ODFI-ACH Processor.
First, having direct contact with the ACH Processor eliminates the third party processor middleman and shortens lines of communication; resulting in better
customer service.
Second, based on your Company’s credit qualifications, our ODFIs aren’t going to hold your funds for extended periods. You will get full credit
for transactions daily, and returns will be debited against the account on the same basis. You will have full next day access to the funds in your
account, less anticipated returns. Once funds have settled, you have the option of setting up an interest bearing sweep account with the
bank, or creating an ACH transaction debiting the ACH Clearing Account and crediting your operating account.
Third, and most importantly, your ACH Clearing Account funds are insured by the FDIC through a nationally chartered financial institution.
Other Considerations
You should be aware that the process of becoming a 3rd Party NSF Check Processor is a significant undertaking. It requires meeting the qualifications
necessary for establishing an ACH Clearing Account with an Affirmative financial Institution (ODFI) that is required to process ACH settlements through
the Federal Reserve Bank.
NSF Check Processing is a business onto itself and therefore may require one or more of the following:
- Initial investment in operating capital
- 2. Financial Institution (ODFI) approval, which means gathering and submitting financial data and business plans
- A sufficient infrastructure to manage day to day on-going administrative and operational responsibilities
- A certain level of technical and accounting expertise
- Commitment to marketing the product in an honest and forthright manner, and most importantly, a long-term dedication to the electronic payments
industry
In addition, the business may carry known and unknown risks such as:
- Governmental regulation at the local, state, or national level that severely inhibits your ability to operate the service within legal parameters
- An increasingly competitive environment reducing operating margins
- Increased costs relating to marketing the service to retail merchants
- Fraud exposure from merchants or employees
- The inability to process NSF checks due to the loss and unavailability of a replacement ACH Processor-ODFI
As with all financial undertakings, the decision to establish a new business should be taken very seriously, and not before fully researching and analyzing
the risks involved.
NSF Check Recovery Process Flow
Payment Intake
- Merchants deposit consumer checks to Local Depository Banks.
- Local Depository Banks process checks, receiving NSF check returns from the Federal Reserve Bank several days later.
- Local Depository Banks forward NSF check returns to a central ACH processing point, i.e.: third party NSF Check Processors.
Payment Processing
- NSF Check Processors receive returned checks and manually enter, feed through an automated check reader, or check imager, returned item MICR
line data into Affirmative's Internet ACH Processing Software program NSF Check Processing.com.
- Two payment transactions are created; a transaction to recover the face value of the returned item, and, a transaction to collect a returned
item fee from the Check Writer as allowed by State law.
- Payment transactions are batched in a file and transmitted to an Originating Depository Financial Institution (ODFI) at the end of the day
(b).
- NSF Check Processing.com automatically resubmits returned items up to maximum submission limits. Non-qualifying checks are
forwarded for Secondary Collections at the Merchant's direction.
- Merchants/Recovery Entity access reporting and database of transactions being processed within the NSF Check Processing.com
application.
- Merchants/Recovery Entity retains a copy or image of the returned check for seven (7) years.
Payment Settlement
- The ODFI transmits payment transactions to the Federal Reserve Bank who processes the transactions overnight, debiting the Consumer's bank
account (RDFI) and crediting the merchant's account.
- If the payment transaction does not clear it is sent back to the ODFI as a returned item.
- The merchant receives returned items electronically from the ODFI through NSF Check Processing.com, and the returned item
is resubmitted a second or third time as necessary.
- The completed electronic payment transaction is evidenced as settled on both the consumer's and merchant's bank statement.
Payment Flow
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› Receiver = Checkwriter
› Originator = Merchant
› ODFI = Merchant's Processing Bank
› ACH = ACH Operator
› RDFI = Checkwriter's Bank
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