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How can the ACH network be simplified to compete with Check 21?


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It is suggested that the automated clearing house (ACH) network has gone beyond being necessary and has become too complicated. To remain a viable low-cost payment solution and compete with other services related to Check 21, the network and its transactions need to be simplified. Various factors contribute to ACH complications, including cheque conversion and multiple standard entry class (SEC) codes, having various transaction types for any forward presentable items, the complexity of ACH rules, too many exclusions regarding which items may be converted, and the current provision in eChecks that let consumers 'opt-out' of having cheques converted into ACH debits. While ACH holds some advantages over Check 21, several suggestions are provided to simplify the ACH network and benefit all participants, including eliminating unnecessary SEC codes, written authorisations for eChecks, 'opt-outs' and all cheque conversion exceptions. In order to facilitate these suggestions, additional action items are also discussed.

Keywords: ACH; Check 21; SEC codes; check(s); cheque conversion; cheque(s); transaction

Document Type: Research Article

Publication date: January 1, 2008

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  • Journal of Payments Strategy & Systems publishes peer-reviewed articles and case studies analysing best practice, emerging issues and new thinking in how to develop a profitable, customer-focused payments strategy. It examines major issues facing the corporate, wholesale and retail payments industry from a business, risk and operational perspective.

    Edited by renowned payments expert Alec Nacamuli and guided by an eminent Editorial Board, each quarterly 100-page issue provides practical, detailed analysis of developments and trends in the payments business, regulation, new entrants and technologies and how to bring them all together to define your payments strategy, as well as actionable advice and ‘lessons learned’ from fellow professionals on how payment processing systems can be leveraged to maximise profitability, security and efficiency and minimise risk. It contains no advertising and no advertorial.

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