Payment Basics: NSF Re-presentment

What is NSF?

NSF stands for “non-sufficient funds.” An NSF check is a returned check. This means the bank has refused to honor the check because there isn’t enough money in the account to cover it. These are often also simply called bad or bounced checks.

What happens when an NSF check is written?

When an NSF check is written, a number of negative consequences may follow. The financial institution of the person writing the check makes one of two choices:

Allowing the check

The bank of the check writer may also decide to let the check push through. This, however, would put the check writer’s account into an overdrawn status. For some banks, this means they will charge the account holder fees simply for overdrawing, but may continue to charge for each day or certain amount that they are over. It can end up burning quite a hole in the wallet.

Refusing the check

For the check writer, the bank may refuse to honor the check. The bank will not allow the funds to process, and the writer will likely be charged a fee just for writing the check.

If the bank chooses not to honor the check, they will return the check to the depositor (the person cashing the check or depositing it into their account as a payment). When this happens, the check will not clear, and the depositor’s bank will also tack on a “Deposit Item Returned” fee (DIR). Potentially, the returned item could sink the depositor’s account into overdrawn status, also initiating an overdraft fee.

Banks consider both the depositors and the check writers as being responsible for the NSF check – and they have no problem making it a very expensive mistake.

How do you protect your business from NSF checks?

NSF checks can be very frustrating and costly to businesses that need to process payments. Some decide not to accept checks at all as a last resort, but this is choice limits the payment options of your customers.

For many businesses, it’s a wise decision to accept paper and eChecks, or electronic checks. This allows customers the flexibility of selecting a payment option that works for them – and many people just want to simply have a payment come right out of their checking account.

But how can business handle NSF checks? It’s wise to have a plan set into place so that when NSF checks appear, it isn’t a complete disaster. NSF re-presentment is your best option, as it allows you to recover the funds for each check.

What is NSF re-presentment?

When an NSF check is written, re-presentment will simply “re-present” the check to the writer’s bank at a later date. This way, the check has another shot to clear. CSG Forte’s NSF re-presentment option lets you select the date you wish to re-present the check, which enables you to choose a time when you think there is a stronger likelihood that the funds are available. You may know, for instance, when your customer gets their paycheck. Scheduling NSF re-presentment on or directly after this date increases your chances of accessing the funds and clearing the check.

 

What’s a payment channel?

Since all of our recent chatter about omni-channel is centered on multiple channels, here’s a quick breakdown on payment channels and what we offer.

A payment channel is basically any way that a customer might make a payment or anywhere that you (as a merchant) might accept a payment. This is slightly different from retail channels, which might include bricks-and-mortar, catalogs, and online shopping/eCommerce sites. Payment channels are generally related to these retail channels, but are more specifically how the payment might be made: physical POS systems, phone/IVR payments, online checkout solutions, and mobile payment options, for example.

So these correlate to retail channels, but leave some room for overlap. For example, at a bricks-and-mortar retail channel, you might process payments on a physical POS system (ie the cash register), as well as on smartphones or tablets within the store. Your catalog might accept payments by phone, but also integrate nicely into the omni-channel concept so that customers could walk into your bricks-and-mortar store to pay at the POS, or they could shop the catalog online and pay via online checkout. There is a relationship between payment channels and retail channels, and since you definitely want to start creating a cohesive experience via omni-channel, it’s important to consider what payment channels you might implement.

CSG Forte offers full payment processing support for the following channels:

Physical POS

We can supply card readers, help build a solution with our Virtual Terminal that turns existing computers into instant workstations, and more.

Phone/IVR

Comes with your own toll-free number and script-building assistance.

Mobile payments

Use the iDynamo and our mobile app to instantly take payments on smartphones and tablets.

Online payments

Our new Checkout is smart, speedy, and stocked with options.

You can accept both credit cards and electronic checks on any of these channels, and each channel comes with our cloud-based Virtual Terminal for transaction management and our powerful payment gateway services. All of the reports funnel into the Virtual Terminal, so you don’t have to worry about piecing things together on your own.

These payment channels don’t necessarily have to correlate only to retail, as well. Government agencies could implement online payments to accept taxes on the web and build a smart physical POS system for in-office payments. Veterinary clinics, dance studios, and other businesses can all benefit from considering an omni-channel approach.

And what’s easier than setting up all of your channels with one company? Get started with CSG Forte today. Give us a call at 866.290.5400 to see what we can do for you.

 

SEC Code Glossary: A Quick Guide to Entry Class Codes

In the world of electronic payments, NACHA (National Automated Clearing House Association) governs and dictates the regulations for processing electronic transactions through the Federal Reserve. The regulations are very serious, utilized in legal proceedings regarding transactions and relied upon by banks, payment processors, and both federal and state governments. NACHA keeps the order for the industry, and it’s important to abide by every one of their regulations.

Whenever a transaction is submitted, NACHA needs an SEC code along with it.

What is an SEC code?

SEC stands for “Standard Entry Class,” and is basically a code that denotes the way a customer authorized a payment. When you apply for payment processing, sometimes you will find that certain types of payment methods are associated with lower costs.

For now, we’re going to give you a quick glossary of SEC codes for easy reference.

POS/POP

POS (Point-of-Sale) and POP (Point-of-Purchase) entries refer to single debit payments made in-person via credit/debit card (POS) or converted check (POP). Both the card and/or the check are used to record the account information in association with the payment, and the original method of payment is then returned to the customer.

PPD

PPD (Prearranged Payment and Deposit Entry) refers to Direct Deposit entries and any Preauthorized Bill Payment applications. In this way, these payments can be both debits or credits (meaning funds can be removed or deposited into an account) and either single or recurring (occurring as a one-time payment or scheduled multiple payments).

WEB

A WEB (Internet Initiated Entry) is simply any debit via the Internet. These entries may be single or recurring.

These debits must be authorized by the receiver via the Internet. In other words, if the authorization itself was actually received in person, via U.S. Mail or by phone, for example, even to actually suffice for a payment from the Internet – it’s not really a WEB entry. However the authorization was received is how the transaction must be classified via the SEC code.

Also bear in mind you may only initiate a credit here as a reversal of a WEB debit. You can’t submit a credit using the WEB entry code.

TEL

TEL (Telephone Initiated Entry) entries are single debit entries authorized via the telephone. In this oral authorization entry there must be a pre-existing relationship between the receiver (person authorizing the payment) and originator (person/entity receiving the payment). If there is no relationship already in place, then the receiver has to make the phone call.

Additionally, all TEL transactions have to be recorded and kept on file for a minimum of two years from the date of the transaction. If the transaction is not recorded, then the originator needs to provide the receiver with a written notice that confirms the oral authorization before the payment settles.

CCD

A CCD (Corporate Credit or Debit) is also known as “Cash Concentration or Disbursement.” These entries can be either a credit or debit – and occur specifically between corporate entities. It can be a single entry or recurring.

All business bank account transactions are listed under this SEC code. A signed authorization has to be obtained either separately or included in the contract between the businesses prior to the transaction date.

ARC

An ARC (Accounts Receivable Entry) is defined as a check conversion that is originally received via the U.S. Mail. This includes the USPS (United States Postal Service), as well as courier services like FedEx and UPS. According to NACHA, this does not include personally delivered or night drop-box items. Corporate checks are also not included.

There’s also a slight change you’ll run into these less common SEC codes:

CTX

CTX (Corporate Trade Exchange) entries are initiated by originators to pay or collect their obligations. The funds are transferred to other organizations and so mirror the same business entity requirements as the CCD entry code. Both credits and debits are allowed.

RCK

The RCK (Represented Check Entry) entry refers specifically to single debits that occur as a result of check representment. Check representment occurs after an item is returned NSF (Non-Sufficient Funds), or is bounced. The service will simply represent the check at a later, scheduled date after it is returned. Some businesses choose to initiate check representment in order to attempt to recollect their funds. For merchants that use RCK entries, a notice must be displayed visibly at the POS.

BOC

BOC (Back Office Conversion Entry) entries are single debit entries that are initiated by source documents (checks) received at POP or manned bill payment locations (in-person). These checks are collected first then converted to ACH during back office processing.

CIE

A CIE (Customer Initiated Entry) is a credit initiated usually through a bill payment service by an individual. These are meant to pay an obligation.

XCK

The XCK (Destroyed Check Entry) refers to a replacement entry that is initiated when an original check is unreadable, lost or destroyed and cannot be processed.