ACH Processing

What is ACH?

The automated clearinghouse (ACH) is a nationwide mechanism that processes electronically originated batches of credit and debit transfers, enabling funds to be debited from a customer’s bank account and deposited into a merchant’s account for services rendered or goods sold. 

The Federal Reserve Banks are collectively the nation’s largest automated clearinghouse operator, processing more than 80 % of commercial interbank.  For over 30 years the ACH network has been available as a payment option for consumers.  According to NACHA (National Automated Clearing House Association) in 2004 there were more than 12 billion ACH payments made worth $28.7 trillion.  The majority of consumers understand that electronic payments are safe, secure and convenient.  More and more consumers are requesting the benefits of ACH payments:

• saves time
• easier than writing a check
• convenience
• no postage required
• eliminates late fees
• credit rating protection

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Sage Payment Solutions and ACH

Sage Electronic Check Services and Sage Collect Direct are our ACH payment processing products, Sage Gateway is the engine, and Sage Virtual Terminal is a tool that works in conjunction with the ACH network to process payments securely and efficiently.  Smaller merchants will use the Sage Virtual Terminal to process ACH payments, while larger merchants, software companies, and ISPs may choose integrate directly with the Sage Gateway to process transactions.  The ACH network is used for both one time payments and recurring payments.  Sage's ACH products comply with NACHA regulations.  NACHA (National Automated Clearing House Association) develops operating rules and business practices for the Automated Clearing House (ACH) Network and for electronic payments. 

ACH Flow

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About Check 21

The Check Clearing for the 21st Century Act (Check 21) was signed into law on October 28, 2003, and became effective on October 28, 2004. Check 21 is designed to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation. The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check is the legal equivalent of the original check and includes all the information contained on the original check. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the Act to create substitute checks.

Check 21 facilitates significant change in the way checks are processed in the United States, exchanging electronic images of checks with is faster and more efficient than physically transporting paper checks.  All banks are affected by this law even if they do nothing to change their current check processing operations.  All customers (consumers and businesses) are affected by the Check 21 Act in that they have the potential to receive a substitute check.  All checks, except foreign checks, are eligible to become substitute checks, including, but not limited to, the following:

• Consumer checks
• Business checks
• Corporate checks
• Government warrants
• U.S. Treasury checks
• Money orders
• Controlled disbursement checks
• Payable through drafts
• Traveler’s checks

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