The new devices gaining popularity with merchants allow a paper check to be converted to an ACH and debited automatically from the consumer's deposit account.

Has anyone found any MMDA abuses with these as to third party transfers? While I wouldn't anticipate MMDA customers doing this frequently, I can see that it will require additional work as we monitor on an ex post basis. My systems people tell me initially that while we can stop POS transfers in several ways, this is different.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

I have not yet seen any MMDA abuses with the new check processing system. These items do clear as an ACH transaction. This is different from a POS transaction. They can be returned, a stop pay can be placed, etc. If I have a MMDA customer who exceeds the transaction limitation, they will get a letter because they did in fact write more than 3 checks.

I think that one of the real challenges we face is the correct handling of these ACH alternatives to checks. In many systems, all ACH items receive the same processing transaction code. But some ACH items qualify for the 6/month limits in Reg. D, and others -- those that replace checks -- arguably should add to the "3 bucket" as well.