By utilizing our Check 21 merchant account, you will not have to worry about chargeback associated with processing electronic checks through the ACH Network because chargeback is treated as Revoke Authorization and this will insure you can focus more on your core business instead of the worry about maintaining positive chargeback ratio. The entire Check 21 system was implemented in 2004 by the Federal Reserve to enable financial institution to accept electronic version of check (check draft) instead of physical paper checks to reduce waste and streamline how financial institutions process checks electronically with a check draft or electronically created substitute of a physical check. It is completely legal to process checks using Check 21 so long as the transactions are authorized by the customers/clients. The replacement check has the same legal status as the original one. Companies, organizations and businesses are no longer confined by ACH or NACHA rules and regulations and fines. Many companies that run high risk businesses can greatly benefit from our services.
And of course the replacement check will always look different from the real one and that is because banks use different types of machines to process these checks. There are several check imager on the market today that banks use.
Since we provide a virtual terminal or a check 21 software, there is no need for you to purchase one of these machines because all you have to do is sign onto your account and upload a batch or submit the check details such as the account number, routing number, etc for us to process the payments. This entire process is referred to as remote deposit within the industry.
It is now legal for anyone to use a computer scanner to capture images of checks and deposit them electronically, a process known as remote deposit. There are no time period imposed on banks to keep the original copy of the check so banks can dispose them any time they want but they do need to keep a high resolution copy of the substituted check 21 processing merchant account as this requires the original check to resolve. At times the bank may have to locate the original copy of the check if they want their customers to resolve disputes. Many times the original is not need but If the consumer needs the original check the bank has to provide that in order for them to dispute with the bank. But with Check 21, there is no need for the bank to have the original copy by law so they do not need to provide that to consumers. Banks love this system as they offer them the best choice. Merchants benefit the most from this as customers only have 40 days to dispute a successfull transaction where as ACH offers 3 months and credit card processing offer the consumer 6 months to dispute and file for chargeback.
Also see Electronic Check Processing and Sameday ACH