Payday Loan ACH versus Check 21

By | Dec 20, 2013

payday loan ACH check 21By: Jer Ayler at Trihouse – For Small Dollar Lenders – Check 21 vs ACH Payments

Payday loan, installment lenders, car title loan and collection companies are discovering it’s a challenge to maintain a <1.5% charge-back threshold as required by NACHA and ACH processors.

Check 21 provides another option to ACH processing.

So… for a small dollar lender, what’s the difference between Check 21 and ACH?

Borrowers provide their lender with a bank routing number and account information in conjunction with an authorization to debit the borrower’s bank account. The collected funds are deposited into the lender’s  bank account.

Check 21 uses bank-to-bank image transfers rather than the Automated Clearing House (ACH) network to process the transactions. Transactions for both Check 21 and ACH clear through the Federal Reserve at midnight.

The biggest difference between Check 21 and ACH from a lender’s perspective? ACH transactions are governed by NACHA regulations which require that revoked transactions – also known as “chargebacks” or “consumer unauthorized” be maintained at less than 1.5%.

Check 21 is governed by check laws and the Uniform Commercial Code. It’s legal for anyone to use a computer scanner or mobile phone to capture images of checks and deposit them electronically; a process known as “remote deposit.” Thus, there’s more flexibility in the number of “revoked transactions” that can be processed.

Advantages / Disadvantages of Check 21 Processing.

If your “revoked transaction” rate exceeds 1.5%, you will not successfully maintain an ACH account. The primary advantage of Check 21 is that provides the lender with a better way to process echecks with fewer concerns about “revoked transactions.”

Lenders concerned about the current ACH environment should implement Check 21 . Note that the Paytoo “virtual wallet” offers a simple to use Check 21 component. See it in action by requesting a demo here: Paytoo Wallet Demo Request

How to Start a Car Title Loan Business

Share
1 Comment so far
  1. Sherita March 16, 2014 2:51 am

    It’s best to get all the information about insurance companies,
    get multiple quotes from different companies and also
    be updated about latest insurance news before going to
    any insurance agent. It is very compact to carry and easy to operate as well.

    I leave a response when I appreciate an article on a website or I
    have something to add to thee conversation. It is
    a result of the fire communicated in the post I browsed.
    And on this article Payday Loan ACH versus Check 21 | PaydayLoanIndustryBlog.

    I was moved enough too drop a thought 😉 I actually do have 2 questions for you
    if you don’t mind. Could it be simply me or does it look as if like some of these remarks come
    cross like left by brain dead folks? 😛 And, if you are posting on other places,
    I would like to follow you. Could you make a list all of your shared sites like your linkedin profile,
    Facebook page or twitter feed?

Leave a Comment

If you would like to make a comment, please fill out the form below.

Name (required)

Email (required)

Website

Comments

What is 14 + 6 ?
Please leave these two fields as-is:
IMPORTANT! To be able to proceed, you need to solve the following simple math (so we know that you are a human) :-)
© 2009-2019... Payday & Title Lending, - Payday Loan Biz Resources & Courses How to Start Title Loan Business Website Legal Terms Disclosure
Share
Share