I know what you're thinking, "Here goes Paul again, on another one of those ësolutions looking for a problem' things," but NO, this is something else altogether. Readers from various parts of the country have asked us how TeleCheck is getting around the NACHA rule on maximum value of an item under the Electronic Check Pilot Program. This answer can get a little fuzzy, but basically it's that these items are not truncated checks and they are really not point-of-sale originated transactions.
For lack of a better description we are going to call this "check FAXation" (new phrase I created) because the big, important, technical breakthrough on this product is not a MICR reader or point-of-sale capture device, but rather a faxed request for a future Electronic Funds Transfer.
Now, I know you're thinking these two ideas have nothing whatsoever in common. Well, that's the rub. Sales professionals in the field are inaccurately calling "check FAXation" ECP or soint-of-sale capture. Some sales professionals and prospective customers are confused by the introduction of this product, and some merchants left with the understanding that FAXED EFTs are ECP, or vice versa.
So let's review TeleCheck's program and eliminate the confusion:
1. The program is called the "Time-to-Buy" program, and provides for multiple Electronic Funds Transfer (EFT) debits.
2. The program permits a maximum of four (4) EFT transactions for each sale. This is the equivalent of accepting four (4) hold checks.
3. The merchant must complete an "Electronic Funds Transfer Authorization," and maintain a copy of this form signed by the consumer for at least two (2) years.
4. The merchant will be paid the amount of each of the four debits, less a $20.00 fee paid to TeleCheck, for each EFT transfer.
5. The consumer must provide his/her name, Social Security number, employer's name, employer's address, financial institution's name, financial institution's location, and a voided check to fax to TeleCheck.
6. TeleCheck's warranty payment does not apply to any of the EFT payments, if the subscriber is unable to deliver to TeleCheck within five (5) business days of TeleCheck's request, copies of the Electronic Funds Transfer Authorization Agreement, the purchase agreement, any credit application, or proof of purchaser insurance relevant to the transaction.
7. A merchant will be required to pay $25.00 to TeleCheck to void a previously authorized EFT transaction.
8. A merchant will be required to pay $25.00 to TeleCheck to reverse an EFT payment.
9. The first transfer (payment to the merchant) must NOT be sooner than three business days after the inquiry, nor can the last EFT be more than 30 days from the first inquiry.
10. The "Electronic Funds Transfer Authorization" must be faxed to TeleCheck within one (1) business day of the inquiry.
So, in short, this product does not use a MICR reader, and is not settled the next day through the ACH system, as some believe. To put that yet another way, it is not a "Check Capture" or ECP product at all. It is a check replacement product.
We hope this helps.
