More NewsNACHA Approves Rules for Identifying Business Checks Ineligible for Conversion

NACHA Approves Rules for Identifying Business Checks Ineligible for Conversion

The voting members of NACHA, the North American Electronic Payments Association, have approved an amendment to the NACHA Operating Rules that provides methods for Originators to identify business checks that are ineligible for check conversion, and also provides corporate Receivers with methods to opt-out of check conversion. The existing rules for check conversion allow only consumer checks to be converted. In practice, however, many checks written by businesses are being inadvertently converted because originators cannot distinguish some business checks from consumer checks. Elliott C. McEntee, president and CEO of NACHA, said: “The new rules will give originators simple and effective methods to identify business checks that should not be converted. The new rules could also lead to greater use of check conversion, particularly ARC, by making it easier for Originators to comply with the rules. We know that some companies have not implemented ARC because they believe they cannot identify many business checks that should not be converted.” The new rules provide that checks that contain an auxiliary on-us field in the MICR line are ineligible for conversion. Such checks are typically used by corporate treasury, purchasing and accounts payable departments, and can be readily identified because they are nine inches in length, compared to the standard six inches for consumer checks. Businesses that want to opt-out of check conversion can use check stock that contains the auxiliary on-us field.

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