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New Publication to Assist Billers and Financial Institutions with Accounts Receivable Conversion Programs

New NACHA Operating Rules, known as the Accounts Receivable (ARC) application, became effective on March 15, 2002 allowing checks delivered to remittance and lockbox locations to be converted into e-checks using the Automated Clearing House (ACH) Network.

"The Accounts Receivable application allows a billing company to take advantage of the inherent efficiencies of electronic payment processing, while allowing consumers to continue to use checks if they choose," said Elliott C. McEntee, President and Chief Executive Officer of NACHA. "With billions of checks sent to accounts receivable locations every year, the use of e-checks can substantially reduce payment processing costs."

A new publication, entitled Guide to Implementing an Accounts Receivable Entry Program, is being issued to assist billers and financial institutions in implementing an accounts receivable conversion program.

The publication will become available at NACHA's PAYMENTS 2002 conference, April 14-17, 2002 in Dallas, Texas, and can also be pre-ordered from NACHA at info@nacha.org or 800-487-9180. The price is $25 for members and $45 for non-members. The new rules in their entirety, as well as additional guidance from NACHA, are contained in both the 2002 ACH Rules and the Corporate Edition of the 2002 ACH Rules, also available from NACHA at www.nacha.org.

An e-check is an electronic debit to a checking account that is initiated at the point-of-sale, on the Internet, over the telephone, or through the accounts receivable application, and processed using the ACH Network. E-checks are covered by the Federal Reserve's Regulation E, which defines specific consumer protections from error and fraud.

Under the new rules, a check that a consumer mails to a biller's remittance or lockbox location, or delivers to a dropbox location, may be used as a source of information for originating an ACH debit to the consumer's account. Billers must notify consumers if they intend use checks as source documents for ACH debits.

The NACHA Operating Rules standardize payment formats for the ACH Network, and define the rights, obligations and warranties of parties involved in ACH payments. Operating rules provide a uniform business and legal framework for the exchange of payments, which enhances participants' confidence in the safety and reliability of the payments system.

The ACH Network serves 20,000 financial institutions, 3.5 million businesses, and 115 million individuals. The ACH Network is commonly used for Direct Deposit of payroll and government benefits such as Social Security, Direct Payment of consumer bills, business-to-business payments, federal tax payments, and, increasingly, e-checks and e-commerce payments.

In 2000 there were 6.9 billion ACH payments made worth more than $20 trillion.

About NACHA - The Electronic Payments Association NACHA is the leading organization in developing electronic solutions to improve the payments system. NACHA represents more than 12,000 financial institutions through direct memberships and a network of regional payments associations, and 650 organizations through its industry councils. NACHA develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments in the areas of Internet commerce, electronic bill and invoice presentment and payment (EBPP, EIPP), e-checks, financial electronic data interchange (EDI), international payments, and electronic benefits transfer (EBT). Visit NACHA on the Internet at www.nacha.org.

First published on BankersOnline.com 3/18/02

First published on 03/18/2002

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