|Beginning September 15, 2006, the ACH NACHA Rules will allow certain business checks to be converted to ACH transactions.
Business checks that can be converted to Accounts Receivable Conversion (ARC) or Point-of-Purchase (POP) include business checks that do not contain an Auxiliary On-Us Field and are for dollar amounts up to $25,000.
Business Check Conversion Basics
Many businesses are now converting paper checks to ACH debits to increase operating efficiencies and decrease costs. The process is known as "check conversion" and this conversion is initiated either at the point-of-sale (making a purchase in a store) or at a "lockbox" facility (for checks received by U.S. mail or at a dropbox location). Consumer and business checks may be eligible for conversion.
The MICR line at the bottom of eligible checks is read using a scanning device to convert the check into an ACH transaction.
Frequently Asked Questions
What is the Auxiliary On-Us field?
The Auxiliary On-Us field is an optional field on a business size check's MICR line (the line of numbers at the bottom of all checks). If a check includes an Auxiliary On-Us field, this information will appear in the leftmost position of the MICR line, before the routing number field. The check serial number usually appears in this field.Does my check have an Auxiliary On-Us field?
Standard 6-inch checks do not include an Auxiliary On-Us field. Six-inch checks are often referred to as 'personal checks,' although many businesses also use them.My check has an Auxiliary On-Us field. Can it be converted?
If this field is present, the check is ineligible for conversion. If you want to have your checks converted, you must request check stock that does not include this field.My check does not have an Auxiliary On-Us field. Can I still opt out of check conversion?
Yes. If you are writing a check to a business that will be converting at the point-of-sale you will need to pay with a different form of payment. If you are writing a check to a business that will be converting the check under the ARC rule, you will need to contact that business to opt out. Also, be aware that checks in an amount greater than $25,000 cannot be converted, even if you do not specifically opt out.What will happen to the original check after conversion?
After ARC conversion, the original check is destroyed within 14 days. Destroying the original check is a safeguard to avoid duplicate presentments.What can you do if your business checks are ineligible but are converted anyway?
If you identify an ineligible check that has been converted, the ACH item can be returned using a new ACH Return Reason code, R39 - Improper Source Document. In order for PNC Bank to process that return in time for the two banking day requirement, the return request must be received by PNC Bank ACH Operations no later than 2:00 p.m. Eastern Time on the day after settlement.How will Stop Payments work? Will my company still be protected?
Your company will still be able to place a stop payment on the original transaction. Your company will need to place the stop payment before the item has been presented for payment to PNC Bank. PNC's stop payment system interrogates converted check items that process as ACH transactions. If a stop payment was placed but did not stop the transaction, you should contact PNC ACH Client Services immediately.How will this work with ACH Debit Authorization blocks and filters?
If you use debit blocks on your account, all converted check transactions will automatically be returned to the company to which the check was written and the payment will not be processed. If you use PNC's Debit Authorization service on your account, the ACH debit will be processed according to your account set-up. If you would like to learn more about PNC's ACH Debit Authorization service, contact your Treasury Management Sales Representative.