NACHA Rule Change

March 2007: Back Office Conversion

Currently, several options exist for businesses to convert checks to electronic transactions. Companies can collect remittance information from checks at the time the check is received in person and return the voided check to the consumer. These items are called Point-of-Purchase (POP) transactions. Companies can also convert checks when they are received through the mail or in a bill payment dropbox. These items are called Accounts Receivable Conversion or ARC items.

New Conversion Option Available On March 16, 2007

A third type of check conversion application, Back Office Conversion, or BOC, will become available. BOC establishes the legal framework and technical specifications to enable retailers and other merchants to accept checks for payment at the point of purchase and convert those checks to ACH debit entries during back office processing at a centralized location.

NACHA, the National Automated Clearinghouse Association, established the following procedure for converting checks to BOC entries.

Other relevant revisions to the NACHA rules effective March 16, 2007:

  • ARC source documents no longer must be destroyed; instead, the originating company must provide secure storage of both the source document and any banking information.
  • Reinitiation of ACH entries that were returned for insufficient funds or uncollected funds has to occur within 180 days after the settlement date of the original entry.
  • The MICR information for ARC and POP entries must be captured using a reading device and may not be key entered.
  • The name and description of the CCD entries is changing from Cash Concentration or Disbursement to Corporate Credit or Debit.

Important Legal Disclosures and Information

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